The mutual fund is one of the more democratic inventions of the modern-era investment world: the pooling together of thousands of investors’ capital and placing it in the capable hands of an investment professional, generating collective returns and mitigating collective risk at a fraction of the cost it would otherwise be for investors to go it alone.
Over the past 30-plus years, the fund has become the investing embodiment of millions of Canadians: It’s become the revered, must-have, do-no-wrong investment vehicle of choice for building a nest egg, saving for retirement and passing on savings to the next generation.
Financial advisors and banks flout them as the clear investment vehicle of choice — as necessary for your investment health as vitamins are for your body’s health. Mutual fund companies devote millions marketing them to anyone who might consider setting up a monthly contribution or, better, signs over a big chunk of his or her savings. They are as culturally entrenched as hockey, housing and snow and they continue to win the popularity contest, despite the proliferation of more economical — that is, cheaper — options such as exchange-traded funds and even low-cost mutual funds.
M. Corey Goldman – Financial Post – February 6, 2014.
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