Investment strategies that use indexing work even in down markets according to Gerry Rocchi, president of Barclays Global Investors Canada Ltd.

The head of BGI Canada says performance data of his iUnits index funds provided by globefund.com confirms this. Rocchi says eight of the 11 iUnits index exchange traded funds that have a one year history “had either first or second quartile performance in their asset class.”

“It is time to lay down the myth that active management adds value in flat or down markets,” Rocchi added. “The globefund.com data show that for all the major asset classes the median active fund did not beat the index in last year’s punishing markets.”

The weak performance of the median active fund in 2002 is not surprising for anyone familiar with the theory and facts in support of indexing.

Rocchi says myths about indexing persist for a couple of reasons. In any given year a fund will beat the index, buy this year’s winner is often next year’s loser. “Investors tell us that the difficulty of picking winners is one of the key reasons why they use our iUnits index funds,” says Rocchi.

Rocchi also notes that some funds will used “use assets that are not part of the benchmark index for its category. For example, Canadian equity funds can hold up to 30% US equities and still be Canadian property.” You need to be sure you are comparing apples to apples he says.