AGF Eliminates Underperformance Bonus

They don’t call it an “underperformance bonus”, but rather it was referred to as the AGF Elements Advantage and it was quite innovative while it lasted. It was announced at the end of 2005, but essentially the “fund of funds” under the AGF Elements portfolios banner would credit back up to 90 basis points (0.90%) to an investor if their portfolio did not outperform it’s blended benchmark over a three year period. (A “fund of funds” is a mutual fund that holds a number of different mutual funds itself, to create a one stop solution for a complete portfolio.)

You can read about the “AGF Elements Advantage” here (this will become an invalid link shortly, I presume)

You can read the press release that announced that they were canceling the program here (it’s found near the bottom of the release). Anyone who bought units while the program was still running will be grandfathered, but the program will no longer be offered to units purchased on June 22nd, 2009 and after.

Too bad – it was a step in the right direction. If we didn’t have such a market meltdown, it would be interesting to see if they still would’ve eliminated the program since statistically it’s very likely that investors would collect the Elements Advantage very often as most mutual funds underperform their benchmarks on a routine basis.

Preet Banerjee
Preet Banerjee an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
Related Posts