In this episode of the podcast, Jon Orr and Kyle Pearce dig into the pros and cons of investing in managed mutual funds versus their benchmark index funds. Despite the common messaging in the media surrounding the high management fees and the inability for any managed fund to consistently beat the market from year to year, we look to unpack some of the potential benefits that managed mutual funds might provide for those seeking a more hands-off approach.

In order to dig in more deeply, we share some sample analysis of the performance of a few managed mutual funds over a decade and get more specific as to what the media could be saying when they claim that mutual funds don’t consistently beat the performance of their benchmark index.

As you’ll learn in this episode, some managed funds do outperform their benchmark indexes over longer periods of time and therefore push back on the claim that one should always consider index funds over managed mutual funds for their retirement, education, or other investment savings accounts.

Which route should you go? Let’s take a dive into actively managed mutual funds vs. benchmark index funds and determine what might be the best fit for you based on your specific goals and investor profile.

What you’ll learn:

What are managed mutual funds and benchmark index funds?
Are benchmark index funds always the better option than a managed mutual fund?
Should I be ditching my “big bank” managed mutual fund?
Does a mutual fund with a high Management Expense Ratio (MER) always matter?
What really matters when it comes to passive investing in the stock and bond market?

Resources:

I Will Teach You To Be Rich - Ramit Sethi
With the Odds on Their Side, They Still Couldn’t Beat the Market [NY Times]
Mutual Funds That Consistently Beat the Market? Not One of 2,132 [NY Times]
Canada’s top 3 mutual funds of the decade [MorningStar]
Best Small Cap Index Funds As of November 2023 [Forbes]
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Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

Looking at Mutual Funds Under the Microscope

Canadian Wealth Secrets