Canadian-based Equity Mutual Fund Performance, 2008-2022

Using data from Morningstar, we analyze the performance from 2008 to 2022 of the main equity categories of actively-managed Canadian-domiciled mutual funds.The results differ by category but averaged across the four main fund categories, fund gross returns roughly equal their gross benchmark returns. Measured net of expenses, fund returns trail those of investable benchmarks (index mutual funds and passive exchange-traded funds) by about 1 percent annually, roughly the difference between the fund and investable benchmark expenses. On average, each year only 41 percent of fund net returns exceed their investable benchmark. Only in the smallest fund category, Canadian Small/MidCap, do funds readily outperform their investable passive benchmarks.Actively-managed funds fail to outperform benchmarks during market downturns. We also find no reliable evidence of performance persistence, other than the benefit of avoiding poor past-performers’ higher future attrition rates.Our results reflect a stock market that is very efficient in most respects, and in which actively managed equity funds’ minimal benefits are typically more than offset by their additional costs