Wednesday, March 4, 2009

I passed on Frank Russell.

Well, the markets around the world collapsed again on Monday, March 2, 2009. If, like me, you decided to tough out this downturn, you must be worrying, “Where is the bottom?” I believe the simple but unsettling answer is no one knows. Certainly many of the expensive money managers do not have confidence-inspiring records.

Let’s examine the road not taken, at least not by me. Once I considered entrusting my RSP funds to Frank Russell Canada Ltd. In the end, I passed. Today, doing the research for this piece, I came to the same conclusion. Frank is not for me.

Using the mutual fund information available on Globefund.com I discovered that $10,000 invested in the Russell LifePoints Balanced Income B fund back in August 2000 would have grown only by $469 by early March 2009. Not much growth.

I then looked at the CIBC Monthly Income fund – a no-load fund that can be purchased with an initial investment of $500 rather than $5000 required by Russell. How would a similar investment made with the CIBC have fared over the same period? It would have grown by $6542 – a return almost 14 times greater than the gold-plated Russell offering. The Russell fund had a yield of 4.49% based on the last trailing 12-month total, while the CIBC fund returned 7.56%.

It leaves me shaking my head.

Today I propose creating four benchmarks based mainly on ETFs and publishing their results along with the results of a couple of Frank Russell Canada Ltd. Funds. Russell posts the fluctuating daily value of their funds at: http://www.russell.com/ca/daily_prices/default.asp

Let the games begin.

Oh, if anyone has had any personal involvement with Frank, with good experiences or otherwise, I would love to hear from them. (An addendum - a Canadian reader contacted me to say that he/she was told that Russell funds purchased through a large Canadian bank do not carry frontend loading.)

Cheers,
Ken

1 comment:

  1. I wouldn't invest a red cent with that company. I used to work for a contractor that provided IT services to them. What a difficult group of people. Mind you most of them were in the US of A.

    I have the TD Monthly Income fund in my kid's RESPs and am quite pleased with it

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