You have just read your investment statements. After the very good performance of the stock and bond markets in 2023, are you satisfied with the performance of the mutual funds held in your RRSP?
Do you think you made the right choice among the 28,485 mutual funds that financial information company Morningstar Canada lists in 62 categories, each more specialized than the last?
Due to marketing needs, the 53 fund distribution groups have fragmented the 10 main fund categories into approximately sixty subcategories.
- Listen to the economy part with Michel Girard above QUB :
COMPARE YOUR PERFORMANCE
Now is the time to compare the performance of your own mutual funds with the average return (before management fees) reported by the top 10 fund categories sold in Canada in 2023, according to the latest data compilation from TELUS Health.
By “median return” you meant that half of the managers in each mutual fund category achieved a return above that median return, and the other half achieved a lower return.
And when you compare your funds' returns to the “median return” above, don't forget to take into account the management fees your funds earn!
Important note: “The good returns and increase in interest rates in 2023 caused the solvency ratio of an average pension fund to increase by approximately 6.3%,” emphasized Jean Bergeron, Partner, Asset and Risk Management, TELUS Health. You should know that mutual fund managers are the same ones who manage pension fund funds.
ALMOST 2000 BILLION
According to the Investment Funds Institute of Canada, at the end of December 2023 in Canada, we held a total of $1,936 billion in assets in Canadian investment funds, also known as unit trusts or unit trusts.
Here's the breakdown by major fund categories:
- Balanced funds: $901 billion
- Equity funds: $715 billion
- Bond funds: $242 billion
- Special fund: 27 billion
- Money market funds: $51 billion
To appreciate the true value of this colossal amount of savings that Canadians hold in their RRSPs, TFSAs, RRIFs, pension plans, etc., you need to know that these assets in mutual funds represent 60% (i.e. $743 billion) of the debt of the Federal government exceeds $1,193 billion.
Another insightful comparison: the $1,936 billion in assets we have in mutual funds represents just over two-thirds of Canada's nominal GDP in 2023.
- Listen to the economy part with Michel Girard above QUB :
ETFs
To the assets of mutual funds we must add the $382 billion held in ETFs, exchange-traded funds that track a range of stock market indices and sub-indices.
Many retail investors are often disappointed with the performance of their mutual funds and the high management fees they are charged, so they have opted for ETFs whose management fees are relatively low.
Unfortunately, marketing demands once again that the “wonderful” world of investing has multiplied ETFs. Today we have a number of highly specialized ETFs.
A tip: If you're interested in ETFs, stick with ones that mimic the performance of major indices, such as ETFs. B. the Toronto S&P/TSX, the Dow Jones, the S&P 500, the Nasdaq, the MSCI indices (world, EAFE). , Europe, Pacific, Emerging Markets) and the FTSE Canada Canadian Bond Indices.