Canadian Mutual Funds Performance

According to Standard & Poor's Indices Versus Active Fund Scorecard (SPIVA) for the fourth quarter of 2008, Canada's mutual funds performed better than the Canadian S&P/TSX Indices. They have also outperformed many of the American funds, as well. This means that they have fared better through the recent world economic downturn.

53.2% of Canadian Equity active funds outperformed the S&P/TSX Composite Index. The Canadian Small/Mid-cap Equity funds outperformed the S&P/TSX Completion Index by 53.7%. These were the two best categories for this quarter. In contrast, the Canadian Focused Equity category did not do as well. Only 25.3% of their funds outpaced their blended index.

For the past 12 months, all categories have dropped. Their weighted returns are less than their benchmarks. The indices, which were used as benchmarks, did between 1.4% and 4.2% better.

Over longer periods of time, these indices outperformed the majority of active funds by a considerable amount. In a three-year time period, they performed 21% better. For the five-year time period, the indices' performance was 11.2%.

The Dividend and Equity fund category did quite well over the long term. In the three-year period, the S&P/TSX Dividend Aristocrats Index was outperformed by 40% of the active funds. For the five-year period, only 3.2% of the active funds beat this index.

For comparison, in the International Equity category only 21.3% of those active funds outperformed their respective S&P index. In the Global Equity category, only 25.2% shined. The U.S. Equity category had 36.7% outperforming the index.

This information is very useful to the investor. It shows that the Canadian financial industry was stronger than most of the world at the time of these readings. It also means that the Canadian businesses were in an upswing at that time. The investor should receive good returns in Canada for the near future.

In closing, over the short term, Canada's mutual funds were able to withstand the economic downturn that began in 2008. They were able to keep their momentum going while the rest of the world was slowing down. This is very commendable. Only time will tell if they will be able to maintain this trend.