Comments on: Active funds better in bear market? http://blog.canadianbusiness.com/active-funds-better-in-bear-market/ Fri, 20 Nov 2009 07:52:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: stockresearchportalblog.com http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-98 stockresearchportalblog.com Fri, 08 Aug 2008 19:49:34 +0000 http://blog.canadianbusiness.com/?p=246#comment-98 Hi, Great article! I Just subscribed to this blog feed. This blog seems to have some very good advice, interesting articles and great advice. I look forward to reading more! Hi, Great article! I Just subscribed to this blog feed. This blog seems to have some very good advice, interesting articles and great advice. I look forward to reading more!

]]> By: A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-96 A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com Fri, 08 Aug 2008 01:45:14 +0000 http://blog.canadianbusiness.com/?p=246#comment-96 [...] Larry MacDonald highlights Standard and Poor’s latest research report which indicates that during the 2000-2002 bear market, actively managed funds did not offer all the “downside protection” that many people espouse they do as most of the active funds did not beat the index. [...] [...] Larry MacDonald highlights Standard and Poor’s latest research report which indicates that during the 2000-2002 bear market, actively managed funds did not offer all the “downside protection” that many people espouse they do as most of the active funds did not beat the index. [...]

]]> By: This and That # 104 http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-94 This and That # 104 Thu, 07 Aug 2008 22:41:55 +0000 http://blog.canadianbusiness.com/?p=246#comment-94 [...] managed funds are supposed to perform better than the benchmark index in a bear market. Larry MacDonald highlights a Standard & Poors study (found here) that shows that only 4 in 10 funds beat the TSX Capped Composite Index (which [...] [...] managed funds are supposed to perform better than the benchmark index in a bear market. Larry MacDonald highlights a Standard & Poors study (found here) that shows that only 4 in 10 funds beat the TSX Capped Composite Index (which [...]

]]> By: Canadian Capitalist http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-93 Canadian Capitalist Thu, 07 Aug 2008 19:09:28 +0000 http://blog.canadianbusiness.com/?p=246#comment-93 The report can be accessed here: http://www2.standardandpoors.com/spf/pdf/index/080508_Canada-BearSPIVA-Report.pdf It may be difficult to compare the index performance with an ETF. XIC used to be the capped version of XIU and was introduced, if I recall correctly, in 2001 -- well after the bear market was underway. But, it is still valid to compare active funds with the TSX Capped Composite index because investors can track its performance today through XIC (the mandate of the original ETF was changed in 2005). Active funds already have an advantage in bear markets because they keep some cash around. It is surprising that only 2 in 5 funds managed to beat the benchmark index, which has no cash holdings. The report can be accessed here:

http://www2.standardandpoors.com/spf/pdf/index/080508_Canada-BearSPIVA-Report.pdf

It may be difficult to compare the index performance with an ETF. XIC used to be the capped version of XIU and was introduced, if I recall correctly, in 2001 — well after the bear market was underway.

But, it is still valid to compare active funds with the TSX Capped Composite index because investors can track its performance today through XIC (the mandate of the original ETF was changed in 2005).

Active funds already have an advantage in bear markets because they keep some cash around. It is surprising that only 2 in 5 funds managed to beat the benchmark index, which has no cash holdings.

]]> By: WhereDoesAllMyMoneyGo.com http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-90 WhereDoesAllMyMoneyGo.com Thu, 07 Aug 2008 02:20:28 +0000 http://blog.canadianbusiness.com/?p=246#comment-90 Okay, I skimmed over it. They note that they have not deducted fund expenses from the index returns - it would be better to see the iShare returns for the ETFs that track these indices. For the active funds, it would be better to add back the embedded trailers of the mutual funds and further subtract the brokerage costs that are not included in the MER calculation. This would provide for a more meaningful comparison. Okay, I skimmed over it. They note that they have not deducted fund expenses from the index returns – it would be better to see the iShare returns for the ETFs that track these indices. For the active funds, it would be better to add back the embedded trailers of the mutual funds and further subtract the brokerage costs that are not included in the MER calculation.

This would provide for a more meaningful comparison.

]]> By: WhereDoesAllMyMoneyGo.com http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-87 WhereDoesAllMyMoneyGo.com Wed, 06 Aug 2008 00:50:47 +0000 http://blog.canadianbusiness.com/?p=246#comment-87 Thanks for the offer Larry - I was able to download it. Can't wait to sink my teeth into it. Cheers Thanks for the offer Larry – I was able to download it. Can’t wait to sink my teeth into it.

Cheers

]]> By: Larry MacDonald http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-85 Larry MacDonald Tue, 05 Aug 2008 23:53:58 +0000 http://blog.canadianbusiness.com/?p=246#comment-85 Preet Were you able to access the study on their website? Maybe it was me, but I couldn't. I had it emailed to me (and can email you a copy,if you like). Preet
Were you able to access the study on their website? Maybe it was me, but I couldn’t. I had it emailed to me (and can email you a copy,if you like).

]]> By: WhereDoesAllMyMoneyGo.com http://blog.canadianbusiness.com/active-funds-better-in-bear-market/comment-page-1/#comment-84 WhereDoesAllMyMoneyGo.com Tue, 05 Aug 2008 21:49:55 +0000 http://blog.canadianbusiness.com/?p=246#comment-84 I'm curious if the cash being held by funds was being held before the bear markets started, or if the performance during the entire bear market phases is just reflective of them switching to cash shortly after a decline and the bear market continuing to decline much further during this time. But what would be really interesting is to see who got back in when markets turned around and how many funds missed some of the better days the market has to offer. It's a moot point though. If underperformance exists over long periods of time, does it matter much what the performance is like on the downside? The market goes up 2 - 3x as often as it goes down (or thereabouts). I’m curious if the cash being held by funds was being held before the bear markets started, or if the performance during the entire bear market phases is just reflective of them switching to cash shortly after a decline and the bear market continuing to decline much further during this time.

But what would be really interesting is to see who got back in when markets turned around and how many funds missed some of the better days the market has to offer.

It’s a moot point though. If underperformance exists over long periods of time, does it matter much what the performance is like on the downside? The market goes up 2 – 3x as often as it goes down (or thereabouts).

]]>