Consistent with the long-term investment horizon of many fund investors, more than half of investors’ mutual fund holdings are in equity funds, i.e., funds that invest in stocks. The portfolios of equity funds are either passively or actively managed. Passively managed funds typically are index funds, managed to track the returns of a specified market index, such as the S&P/TSX. Most equity funds, however, are actively-managed in an attempt to beat the market (or a specified benchmark) by superior stock picking, market timing, or both. Actively- managed funds typically engage in more research and trading activities than do Index funds, and thus generally have much higher costs to manage (or what's known as "MER's")
The mandated warning, however, is not a sufficiently robust disclosure to convey that strong past performance is not a good predictor of strong future performance. Instead, it merely informs investors that past performance may not be repeated in future results, that returns vary, and that investors in the fund might actually lose money. Even this light warning is subverted by putting it at the bottom of the ad page in fine print, light black over grey background.