Two recent newspaper articles warned about the harm to investor portfolios caused by complex or high fee products.
Jonathan Chevreau, personal finance columnist for the Financial Post, wrote (October 24, 2009) about the poor track record of Labour Sponsored Investment Funds (LSIFs). LSIF returns have been very weak, many have suspended redemptions – yet their average MER (fee) is 5.5%!
John Heinzl called one of his Investor Clinic columns in the Globe and Mail (October 28, 2009) “How to Protect Yourself from PPNs.” Principal-Protected Notes seek to appeal to retail investors by combining the possibility of high market returns with the security of guaranteeing their original investment after a number of years. Such a combination comes at a high price – PPNs typically charge management fees of 3% to 5%, are often sold with upfront loads or deferred charges, and use hard to understand options and derivatives.
