I sometimes wonder what it takes to be a reporter for the Globe & Mail these days. This article on MERs by Dale Jackson had an interesting final paragraph:

However, there is a tradeoff when it comes to ETFs versus mutual funds. Investors are exposed to the whim of the broader markets, without the benefit of an experienced portfolio manager to steer clear of danger.

That will be the day, when a portfolio manager of a Canadian equity fund "steers clear of danger." And how are investors NOT exposed to the "broader markets" when they have the "benefit" of an "experienced portfolio manager." I have yet to see any convincing evidence that mutual fund managers are capable of beating the passive indexes, after they have taken their expenses. In case you need any examples...

In one of the earlier paragraphs he said:

It's important to keep in mind that the cheapest funds aren't necessarily the best funds. The DMP Canadian Value Class fund returned more than 28 per cent last year even after the 4.11 per cent MER was subtracted - nearly doubling the average Canadian equity fund and the TSX. The United-Canadian Equity Value Pool fund, on the other hand, returned less than 10 per cent in 2006.

Way to pick out a return from a single year and talk about it as if it means anything. It also seems to be the only data point he uses to back up his sub-heading "Fund fees can add up. But sometimes, you get what you pay for." That return is spectacular though and I like value investing. But that is only one year's return. It will be interesting to see how it does in the coming years. Investing in the best performing funds of the previous year is definitely not a winning strategy.