May 242016

People (mostly bloggers) write and talk about how mutual funds are basically scams but they rarely show proof. Well I finally found some. I present to you the story of TD Global Asset Allocation Fund, TBD158.

Part 1 – Fund Inception

TD Global Asset Allocation Fund was created on January 13, 1998 as noted on this snapshot of the TD website from Nov 1, 2001. The fund’s objective was to maximize long term capital growth by actively trading futures contracts in the global market. If you wanted in on this groundbreaking fund you paid heavily with a MER of 2.95%. The fund also had the power to enter and exit geographic regions at the manager’s discretion, thereby giving him a lot of power over the $210 million worth of assets in the fund. That’s a lot control for one guy and clearly it didn’t go well in the early years:

1999 did okay, but massive losses followed in the two subsequent years. Blame the Y2K bug! Source

The managers blamed the latest losses partly on global uncertainty after the 9/11 terrorist attacks. That might explain losing 9% in 3 months but what about the other -7% that year? and -5% in 2000? Ok the dot com crash had started in 2001 but the fund was still below its benchmark.

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