RBC Canadian Focus List

Focus list sept 2011

VRX is still in the , so is ABX and a good number of other gems. When we first looked at this the fund was approaching its 2011 peak of about $20 per unit. The B wave was as clear as a bell and the next big move should be to the downside. So far it is. We are down almost $6000 on our investment and for the past 6-7 years we have earned nothing and all this for paying a management fee of  2.19% per annum. Not good but explainable considering what the market did, right? Not so, the market (S&P/TSX60) that you can buy on some ETFs at a cost of 17 basis points, a full 2% cheaper is the black line. The correlation is unmistakable , but lately the is actually underperforming, over and above the 2% fee. If my outlook turns out to be correct, the units will be trading at their original issue price of $10 a unit around 2012 or so and you will have paid about 26% to your broker( actually at lot more than that if the MER is ad valorem, which I suspect it is). Of course the usual argument for not going to cash is that it is not the fund managers responsibility, he/she is to be fully invested at all times as that is the mandate. Does every investor know this? And why be fully invested if the outcome will be worse regardless of the mandate?

RBC/ DS does not run it’s own defined benefit pension plan, it is “outsourced” but even so they decided today to stop providing one to employees. Perhaps the results from the Focus list inspired them.