Rob Carrick
The most basic test of your abilities as a DIY investor is to beat the returns of mutual funds.
Do-it-yourself investing saves you a bundle in fees and commissions, and that money should be pumping up your returns. But if your investing chops aren't top notch, you may end up underperforming the very mutual funds that DIY investors love to disparage.
Let's test your results using a few mutual funds located using the fund screener on Globeinvestor.com. We start with funds in the global balanced equity category, which means a globally diversified portfolio with a tilt towards stocks as opposed to bonds. That's basically what the typical person investing for long-term growth would have. Funds were then ranked by 15-year returns and then screened for wide accessibility by putting a ceiling of $5,000 on the minimum upfront investment. If we're going to test you, we have to use easily accessible funds to do it.
The first fund you'll use to benchmark your results is Mawer Tax Effective Balanced Series A, which is the top performer over the past 15 years with an average annual return of 7.7 per cent. This fund for non-registered accounts is a sister to Mawer Balanced, which is classified as a global neutral balanced fund. Mawer Tax Effective Balanced made 8.4 per cent over the past 10 years, 12.5 per cent for the past five years, 15.3 per cent over the past three years and 15.3 per cent for the year to March 31. You can buy this fund through most online brokerage firms, or directly from Mawer. Can you beat it?
Mawer Tax Effective Balanced is a cheap no-load fund (a management expense ratio of just 0.98 per cent), and that helps its returns. Our second benchmark mutual fund is a more traditional product that with an MER of 2.42 per cent. The fund is Dynamic Value Balanced Series A, with a 15-year return of 7.4 per cent and gains of 7 per cent in the past 10 years, 6.9 per cent in the past five years, 11.4 per cent over the past three years and 8.9 per cent in the past 12 months. It's a widely available fund with a minimum upfront investing of $500, compared to $5,000 for the Mawer fund. Can you beat it?
The third benchmark fund is Trimark Global Balanced, a traditional mutual fund with a hefty MER of 2.66 per cent, a minimum upfront investment of $500 and a 15-year compound average annual gain of 6.6 per cent. The 10 year gain is 5.1 per cent, the five-year return is 11 per cent, the three-year return is 13.3 per cent and the one-year return is 11.1 per cent. Can you beat it? If not, you may need to pick up your game as a DIY investor. Or try mutual funds.
Rob Carrick