We believe the most pressing issue for Canadian investors is the amount of closet index product in this country. A recent study showed that 37 per cent of all mutual funds in Canada are closet indexers. Applying this percentage to the amount of assets in Canadian equity mandates, we estimate there is a minimum of $275 billion of Canadians’ hard-earned assets invested in strategies that are structurally positioned to underperform (we say minimum because there is likely a lot more in separately managed account programs and institutional mandates). Closet indexers take minimal bets relative to the market index — if a manager studies company XYZ and believes the stock will not perform well going forward, but company XYZ is the largest component of the index at five per cent, for example, a closet index manager might buy only a three per cent weight. While from that manager’s perspective the portfolio is underweight the market in company XYZ, our question would be: Why own any at all?