Labour-sponsored Funds

Buzz Hargrove, national president of the Canadian Auto Workers, writes in the National Post, page FP19, July 8th, 2005; "There are about 120 labour-sponsored funds in Canada. Two-thirds of them lost money over the past year (even as the TSX composite was gaining more than 20%). None of the 10 largest labour funds has generated a positive return over the last five years."

Hargrove supports government efforts to stimulate investment spending but says "labour funds are not the way to do it. They are wasteful, ineffective and damaging to the integrity of those unions that have involved themselves in them."

Crocus is recently the most prominent labour sponsored fund to encounter difficulty, but there are many others.

Small investors would be well advised to avoid investing in any investment products that they do not fully understand. Whether it is labour sponsored funds or guaranteed investments, investigate before you invest. Money lost is difficult to regain. Determine the risks related to the investments. If there is a guarantee determine what is the guarantee and who provides it? A guarantee to get all of your money back in ten years means you have given a ten year loan interest free.

Investors should be aware of the associated risks prior to investing in any product.