The Toronto Stock Exchange’s market management service, the Canadian Money Market Account, has been rated the worst in Canada by a panel of economists.
The Canadian Financial Market Association, the country’s top financial services association, has also recommended that the service be closed down.
And it has received some unexpected criticism.
“The account is a terrible investment tool for an asset manager who does not understand the underlying business,” said James Gershwin, chief economist at the Toronto-Dominion Bank.
“It does not have the necessary liquidity to be an effective investment vehicle.”
A study conducted by the association found that more than 80 per cent of managers surveyed failed to properly understand their clients’ investment needs, including the risks associated with a low yield.
“Investors are often misled into thinking that the fund’s return is more than the sum of its components, when in fact the return is the sum total of its inputs, according to the report,” it said.
“For example, the investment in the fund is a loss, while the investment itself is a gain.”
As well, a third of the fund managers surveyed said they were misled into believing that they were making money by investing in the funds they were managing.
In a statement, the company said the findings were not meant to be a critique of its performance or its customers’ decision to invest in the program.
“We take seriously the need to provide investors with a solid and reliable financial service that meets their needs,” said an email to CBC News from the company.
The report also criticized the CMAA for not doing more to help fund managers improve their knowledge and skills.
“In many instances, CMAAs investment services have not been designed to meet this challenge,” it added.
The fund’s main investment objective is to provide a balanced portfolio that is both safe and liquid.
But it also includes a range of other types of investments such as stocks and bonds.
It has also been criticized for being over-the-top with its fees.
The CMAF said that some fund managers were charging customers fees for the “use of the CMMA to manage their portfolios.”
“It’s a very costly service for many people,” said John Janssen, the association’s executive director.
“As a result, many people do not want to take on these large investments.”
The fund is currently only open to institutional investors and only on the TSX, but it is expected to expand to the Toronto Stock Exchanges, the Toronto Real Estate Board and other big exchanges.
The association says that the company should have a better strategy for educating its customers on how to manage portfolios, and should also include in its annual report a “better business case for the CMCAs use.”