It's that time of year again and whether they're five or 35 years away from retirement, most investors are wondering and worrying about what to put in their registered retirement savings plans. That's no easy decision, given the past two rocky years in the markets, during which many investors watched their RRSPs shrink in value.
Below, eight mutual fund experts give us a hand by contributing their top choices; one each for Canadian equity funds and foreign stock funds.
In next Saturday's Net Worth they will choose their top balanced funds and bond funds. And we'll look at how they fared in all four categories last year.
They've given us a wide range of choices. Younger investors may feel they can afford to go for the more aggressive funds, while those nearing retirement may want to stick to safer harbours.
The pundits believe the funds below will outperform in the coming year, but if they do -- and of course there's no guarantee of that -- they emphasize that choosing short-term winners is not their primary goal and that funds with consistent, long-term performance are the only meaningful investments for RRSPs.
Here are the RRSP Canadian and foreign equity fund picks from the eight experts.
Mutual fund analyst
CIBC World Markets
CI Signature Select Canadian fund is Mr. Barlow's top pick among Canadian equity funds. "We still see uncertainty ahead, in the economy and the stock market and Eric Bushell is a manager who's been able to find winners even in weak markets," he says. "He finds up-and-coming stocks before others and also, this isn't a risky fund, because he buys stocks at low valuations and avoids making any big bets."
Among foreign stock funds, he favours Mackenzie's Ivy Foreign Equity Fund, a global fund that's ideal for investors who want foreign content and moderate growth, without taking on much risk, he says.
"For those who want to move on from value investing, this is a responsible way to invest in growth. This fund won't blow the doors off, but Jerry Javasky is a manager who's consistently outperformed his benchmarks and holds only quality companies, with a long history of solid growth."
Canadian Mutual Fund Adviser
Mr. Brewster's choice is Bissett Canadian Equity Fund, now part of Franklin Templeton Investments. This growth fund, which leans to mid- and small-cap stocks, has been one of the steadiest performers in its category for more than 15 years, under the same manager, Fred Pynn, he says.
"It's a real standout; it has beat the TSE 300 in eight out of the last 10 years and I think the temper of the markets ahead favour this fund," Mr. Brewster says.
In the foreign stock category, he continues to recommend the Orbit World Fund, run by David Marvin of Delaware-based Marvin & Palmer Associates.
Like most growth funds, this one has hit some rough spots in the past year or two, but "this manager has a very impressive long-term track record and I am confident that he will turn it around and that this is a good entry point," Mr. Brewster says.
Mutual fund analyst
National Bank Financial
Mr. Burke's top Canadian equity fund is the AGF Canadian Stock Fund, because "value has had a great run and now it's time to add some growth," Mr. Burke says. AGF fund manager Martin Hubbes holds some technology and telecommunications stocks, which he bought at good valuations, and health care is also at the top of his list, he says.
"If the market moves sideways this year, stock picking will be key and this manager is a great, bottom-up stock picker -- he's been able to outperform the TSE 300 handily."
Among foreign stock funds, Mr. Burke likes the Janus Global Equity Fund, run by Warren Lammert at Denver-based Janus Capital Corp., a firm widely known in the United States as high-powered growth managers.
But the fund suffered an 18.2-per-cent loss in 2001.
"They bet on key growth areas -- right now it's biotechnology and health -- and they're focusing on the U.S., because they believe it will lead the world out of recession. We think the fund is coming off a bottom; but it's volatile, not a middle-of-the-road fund," he adds.
Mutual fund analyst
Like Mr. Burke, Mr. Filderman's pick in the Canadian equity category is the AGF Canadian Stock Fund. Mr. Hubbes invests in growth stocks at a reasonable price, it should do well in an economic expansion, he says.
"It's one of the very few to beat the TSE 300 consistently over the past five years. Martin Hubbes has terrific stock-picking skills and he's very disciplined about the prices he pays."
Among foreign funds, he likes the Clarington Global Equity Fund.
Manager Bill Wilby also opts for the "growth at a reasonable price" approach and has impressive stock-picking skills, Mr. Filderman says. "He and his team initially focus on economic themes -- including new technologies, restructuring and aging -- that will drive growth in certain sectors and then they do intensive research to choose individual stocks in these sectors," he says.
Mutual fund analyst
Sterling Mutual Funds
Mr. Hallett likes the Standard Life Growth Equity Fund in the Canadian equity fund group, because he remains bullish on small-cap stocks and thinks they will continue to outperform large caps, as they have in the past year.
"What impresses me is the highly-disciplined investment process. It's driven by a macro view from their strategy team and implemented by industry specialists who choose the individual stocks, an approach that's produced very impressive results."
In the foreign equity fund category, he chooses the Templeton International Stock Fund, managed by Don Reed, president of Franklin Templeton Investments Corp., which holds only companies outside North America, largely in Western Europe. "Most people's portfolios are already heavy on North American content and for them this fund provides the kind of diversification they lack and it's been a steady outperformer within its group over the long term," he says.
Like Mr. Barlow, the CI Signature Select Canadian Fund is Mr. Kangas's top pick. He says Eric Bushell is "an outstanding young manager; he has the uncanny knack of identifying the next sector that will move ahead and the companies that will benefit." Mr. Bushell favours growth stocks at a reasonable price and never makes big bets on any one stock or sector, he adds.
In the foreign category, Mr. Kangas opts for AGF International Value Fund. "In bad markets, good markets, any markets; this is a fund that everyone should own," he says. Although it's a value fund, it gained 17 per cent in the roaring growth market of 1999 and in 2000, as markets tumbled, it racked up another 28-per-cent gain. "I'm not convinced that it's time for growth funds yet and this is a fund that's tried and true."
Mutual fund analyst
BMO Nesbitt Burns
Among Canadian equity funds, Mr. Loach also recommends the AGF Canadian Stock Fund. Mr. Hubbes has an investment style that combines value and growth, which gives him flexibility, he says. "But this year, I think stock-picking ability will be No. 1 and he has proved to be outstanding here."
In the foreign equity fund group, he too opts for Clarington Global Equity. "When markets recover, the best place to be is in mid- and small-cap stocks and to have good exposure to the U.S., because those are the areas that will outperform. I also like it because of the first-rate stock-picking ability of the manager, Bill Wilby," he says.
2002 Buyers' Guide
to Mutual Funds
Mr. Pape's Canadian equity choice is the Fidelity Disciplined Equity Fund, so named because it maintains exactly the same sector weightings as the TSE 300. This gives investors automatic diversification, while manager Robert Haber selects the individual stocks within the various industry groups. "In the last three years this fund's return has been double that of its peer group, while its risk has been lower than that of the TSE 300; it's a stock picker's fund in a stock picker's market, which is the kind of market I think we're in now," Mr. Pape says.
In the foreign category, Mr. Pape, like Mr. Kangas, opts for the AGF International Value Fund. "It's a proven winner in all markets -- the bull markets of the '90s, the bear markets of 2000 and 2001 -- its returns are constantly above average and its risk is lower than the average for the global equity fund group," Mr. Pape says. This fund has never lost money in any calendar year since the Brandes team took it over in 1995, he adds.
Funds the experts like
As of Dec. 31, 2001
Assets Returns CANADIAN STOCK $million 1-year 3-year 5-year 10-year 2 CI Signature Select Cdn $299 9.7% 23.4% 12.0% 14.4% 1 Bissett Canadian Equity-F 613 3.8% 10.2% 11.8% 10.5% 3 AGF Canadian Stock 1,845 -4.3% 15.1% 10.4% 1 Standard Life Growth Equity 22 3.7% 14.0% 1 Fidelity Disciplined Equity-A 1,157 -7.2% 17.1% FOREIGN STOCK 1 Mackenzie Ivy Foreign Eq 1,799 4.7% 8.4% 13.0% 12.6% 1 Orbit World 31 -15.6% 8.8% 19.7% 2 Clarington Global Equity 176 -9.3% 11.2% 12.2% 1 Templeton Int'l Stock 5,414 -12.6% 1.8% 5.7% 2 AGF International Value 7,138 0.8% 14.6% 17.6% 1 Janus Global Equity 138 -18.2% 0.9% 9.4%
Highlighted numbers represent the number of times a fund was chosen by the experts
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