The sad fate of labour-sponsored funds
Friday, February 12th, 2010
Remember when all you heard from investment salespeople during the RRSP season was about the 30 per cent tax credits available on a labour-sponsored fund?
Sometimes, they added the RRSP deduction and showed how 75 to 80 per cent of your contribution was subsidized.
Sounded like a great deal, right? But did they also mention the sky high management fees or the fact that a portfolio of emerging businesses might prove to be highly illiquid in an economic downturn?
Unless you held the fund for eight years, you had to repay the tax credits. But just as cash-in time was getting close, many funds suspended redemptions and moved to annual distributions. This meant an even longer wait to retrieve your money, assuming you had much ..read more