Actually, I’m not sure where you are looking, but on globefund, it says 7.72% (10 yr) for the benchmark as of the end of February 2006 and 7.94% for the fund. They also show the 15 yr though which is 8.99% for the benchmark and 8.69%, so if we look at the 15 yr the TD Canadian Bond Fund actually did worse! Interesting. The index globefund is comparing it against is the SC Universe Bond Total Return Index.

The evidence seems to be that a significant majority of funds underperform their indices. Of course, there are some exceptions and hopefully TD Bond Fund is one of them.

FYI: 10 year returns of TD Bond Fund is 7.9%. The benchmark index would have returned 7.67% over the same period.

“The reported returns are net of the fees anyways”

I fully agree. I almost never look at MER to be honest because as you say, the reported returns are always net of the fees anyways.

“For example, if an advisor charges more but consistently outperforms the market, I don’t see the hesistation of fees should come into play.

There is such a thing as being frugal and overhead conscious, but don’t forget that quality doesn’t necessary come cheap. What’s important is the quality and consistency.”

Well said and I have nothing to add to that. I just copied it out verbatim so more people see it.

Well I do have one more thing to say. A real live example. Ross Healy’s Accumulus Talisman Fund collects 1.95% MER every year plus 20% of the amount the fund outperforms the S&P/TSX 60. How’s that for an MER. You could be looking at well over 2% MER there. At the end of January it’s one-year performance was 30.4%. They do not have much long-term performance since they’ve only been around since February 2004.

For example, if an advisor charges more but consistently outperforms the market, I don’t see the hesistation of fees should come into play.

There is such a thing as being frugal and overhead conscious, but don’t forget that quality doesn’t necessary come cheap. What’s important is the quality and consistency.

I think for young people, another factor in the allocation has to be their goals for the money. Goal-oriented allocation means that short-term, long term goals play a major part. Most people will have a weak heart for putting money into equities with the looming prospects of a home purchase within 5 years.

The equity portion can be oriented for retirement goals while bond portions can geared for short/mid-term uses. I myself, don’t see much point of holding short term investments for any reason, any age and I’m glad Ben Graham felt the same. Admittedly, this model may skew the ratio more towards bonds, depending on what stage of life the young people are in.

I prefer to have any bond portion tucked inside an RSP, and being able to leverage the home buyer’s program. And keeping as much of the tax advantaged equity investments outside.

The Intelligent Investor is an amazing book, one of my must-reads for people looking to get into investments.

IMHO, 1% is a steep fee for a bond mutual fund, when cheaper alternatives exist (XBB, for instance).