During my retail advisory days, I was one of the handful investment advisors recommending mutual funds the least. I always found them a lazy way of investing. You pick a sector, check out the top ten or twenty holdings, chat a bit with a fund manager, go out for drinks with a sales manager, and spit out a recommendation.

Picking stocks meant doing your homework because for every solicited trade, you take almost the same risks as your client. In contrast, with mutual funds, the risk is spread around among so many people and factors, often resulting in a mediocre performance being the best case scenario.

Perhaps this is why Canadians bought fewer mutual funds in June. Last month, net sales totaled only a fraction from what was sold a year ago, going from sales of a whopping CDN$1.8 billion in June last year to CDN$297.0 million just last month. By the same token, total industry assets dropped 11.8% during the same period to CDN$588.99 billion.

Among the Canadian mutual funds, foreign equity funds performed the best, while Canadian stock funds saw CDN$537.8 million in net redemptions. This is hardly a surprise, considering that Canada's benchmark index, the S&P/TSX Composite, lost 3.9% of its value in May and additional 1.1% in June.

In terms of bonds funds, Canadians sold CDN$113.8 million worth of units, while most other types managed to hold at least a head above water. Only money market funds jumped into the positive territory by CDN$149.2 million. It doesn't sound as much in and of itself, but in the last two years or so, money market funds lost the most value of all asset classes, as much as CDN$42.7 billion.

Of course, you have to put these numbers within your personal context. When your investment advisor recommends that most of your portfolio be put in mutual funds, ask him/her why. It is an important question and you are paying enough in commissions for your broker's expertise. Sure, I agree that mutual funds should be a part of any diversified portfolio. However, considering that in some cases, it may cost you more to redeem a losing fund then to keep it, make sure you have a good and, more importantly, an informed reason before you invest.