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Mutual Fund News

Choose well and stick with it

Some of the great dynasties in mutual fund investing live here.

Dig through the performance numbers in this special section and you'll uncover funds that have been consistently successful over a span of 15 years.

If you're wondering what credentials you should look for in a fund, this is one of the most impressive.

The Globefund.com website has about 5,800 fund products in its database currently, of which only about 400 have a 15-year history. Lasting this long doesn't make you great, though. For that, a fund has to have regularly done better than others in the same category.

Let's take several of the top 15-year performers in some of the major fund categories and see how they might go together to build a portfolio.

The entirely arbitrary criteria used to narrow down the list include:

Compound average annual returns of at least 9 or 10 per cent over the past 15 years.

The manager most responsible for the fund's performance must still be in place.

The minimum upfront purchase cost must be $5,000 or less.

Above-average annual returns in a majority of the past 15 years.

Performance over the past year must be above average.

In the Canadian equity fund category, Saxon Stock stands out as an example of the sort of quality fund you can uncover by perusing the 15-year tables. Manager Richard Howson has run the fund for the entire period, delivering above-average annual returns nine times and an average annual gain of 12.1 per cent.

Sceptre Equity Growth has made an average annual 13.4 per cent over the same period, and manager Allan Jacobs has been around since 1993.

This fund was also above average in nine of 15 years, although four of its sub-par years came in all in a row between 1997 and 2000.

The lesson here: Long-term success doesn't preclude short-term pain.

In the global equity category, Mackenzie Cundill Value and Saxon World Growth stand out as top fund dynasties.

Both have been managed by the same person for the past 15 years and both have delivered outstanding results, though not without glitches. Cundill Value had several below-average years during the 1990s, but it more than made up for it with a blistering run during the past six years.

Virtually any dividend fund offered by one of the big banks is a decent bet, but the only one with a 15-year track record is TD Dividend Growth. As it happens, this fund is an especially good one. Manager Doug Warwick has been around for almost the entire period, guiding the fund to a compound average annual gain of 11.1 per cent and an impressive total of 10 years where annual returns were above average.

Among bond funds, TD Canadian Bond is an obvious choice among top 15-year performers. Satish Rai has been in charge for the entire period, generating compound average annual returns of just under 9 per cent.

It's worth a look to see what would have happened if you bundled some of these funds together in a portfolio 15 years ago.

Assume you took $20,000 and invested $5,000 in Sceptre Equity Growth, $6,000 in Saxon World Growth, $3,000 in TD Dividend Growth and $6,000 in TD Canadian Bond. Your $20,000 would have grown to $97,259 over the period, a compound average return of 11.1 per cent.

Past success guarantees nothing, so don't be so naive as to expect the same results in the next 15 years. Then again, dynasty funds have a way of delivering for investors smart enough to choose their funds well and stick with them.

rcarrick@globeandmail.ca

Fund dynasties

These six mutual funds have delivered consistently good returns over the past 15 years, and they are still going strong.

As of Dec. 31, 2004FundAsset classAssets ($million)MER %Minimum investment1-year return5-years returns15-years returns
Mackenzie Cundill Value*Global equity$1,667.72.55%$2,50011.91%12.27%10.48%
Saxon StockCanadian equity337.21.875,00012.0614.8912.07
Saxon World GrowthGlobal equity266.51.875,0008.897.2610.79
Sceptre Equity GrowthCanadian equity294.41.725,00025.6220.1613.42
TD Canadian BondCanadian bond4,751.11.071,0007.188.298.98
TD Dividend GrowthCanadian dividend1,019.32.151,00016.7914.2311.14

*Composite date for A, C versions

SOURCE: GLOBEFUND.COM

© 2007 The Globe and Mail. All rights reserved.

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