Some recent data has shown that there has been some moderation in the growth of the economy. The main objective of investing is to provide income and capital growth by investing in income producing stocks. The discouraging employment information, a very weak housing market and lowered consumer confidence have all caused doubt about the recovery by the private sector.
North American funds have had very good earnings in both Canada and the US. This has led to more jobs and more spending by consumers and by investors. Unfortunately, the expectations of any future growth are now being changed to a downward slide.
When talking about North American funds, there is a difference being paid by Canadian mutual fund investors which is upwards of 50% more than what is being paid to investors in the US. One reason for this is that Canadian funds have less competition. The North American funds market puts great emphasis on the abilities of their fund managers, what the differences are in their fees and their fund orientation, when they advertise.
Regulations that are in place in Canada do not allow US residents to buy any Canadian owned funds or for Canadians to purchase any US owned funds unless they are registered with a provincial commission. These regulations regarding North American funds, basically segregates the Canadian and US markets.
The North American funds market can be estimated by pooling all the funds from both countries while keeping in mind the differences between the two. Fund performance can be explained by recognizing the importance of the economies of scale and other fund specific variables. There are three main characteristics that can explain all the persistence in returns. They are MER’s, turnover rates and transaction rates. Some estimate that turnover rates can be attributed to the ability of the managers of the fund to earn what may be called abnormal returns.
The value of North American funds in the US is said to be over 14 times that of Canada. It is also worthy to note that the number and size of North American funds are down. This downward turn seems to parallel a downturn in real estate investments all over the world. Real estate funds worldwide did very poorly and failed to reach their projected targets. Also, when the dollar is weak then most people are somewhat pessimistic about it and that tends to be a time to buy. No one can predict what the dollar will end at this year, but it should not stop anyone from investing in North American funds.