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Mutual Fund News

Giving some fallen idols a fair shake


Periodically, the Number Cruncher column likes to scour the mutual fund world for fallen idols, by which we mean solid names that that have hit a slump. Our latest foray emphasizes strong long-term results coupled with dismal recent returns.


We started with funds of all types that have 10-year compound average annual returns that put them in the first quartile for their categories, which means in the top 25 per cent. We then scanned this list for funds that in the past year have achieved the ignominious distinction of a fourth-quartile ranking, which means their returns are among the bottom 25 per cent of their respective categories.


Quite a number of funds that look weak in the short term and strong in the long term. The question for investors is which view deserves more weight.

An ideal test case is IA Clarington Canadian Conservative Equity, which dates back to 1950 and is still being managed by the some of the same people who produced its comfortably above-average long-term numbers. This fund is significantly less volatile than the broad stock market, and its top holdings are all dividend-paying blue-chip stalwarts. It looks like a candidate for conservative investors seeking a buy-low opportunity.

The two Chou funds stand out because Francis Chou, their manager, is a respected figure in the fund world who has done well in the past by focusing on downtrodden stocks. Chou RRSP holds beaten-up names like Biovail and CanWest Global Communications, and it doesn't have much exposure to prime market drivers like energy, gold and metal stocks.

ABC American-Value is another compelling buy-low opportunity (if you have $150,000 to buy in), and so is Bissett Microcap if you want exposure to risky small stocks. Both funds continue to be run by the people who generated those good long-term numbers, and they're both on sale.

Funds with 1-yr 4th quartile returns & 10-yr 1st quartile returns
As of Sept 2007
Last reported1-yr1-yr10-yr10-yr
Fund nameMER dateMERCategoryreturnquartilereturnquartile
Bissett Microcap-F28-Sep-072.32Canadian Small or Mid Cap Equity9.95419.621
Renaissance Global Health Care28-Feb-073.16Health Care Equity-3.51414.811
Chou RRSP29-Dec-061.74Canadian Focused Small/Mid Cap Equity7.73412.771
AIM Canadian First Class28-Sep-072.40Canadian Focused Equity8.42412.241
CIBC Canadian Small Companies31-Aug-072.56Canadian Small or Mid Cap Equity13.28412.191
Saxon Small Cap29-Dec-061.86Canadian Small or Mid Cap Equity11.00412.031
AGF European Equity Class31-Oct-072.93European Equity6.82411.461
Chou Associates29-Dec-061.74Global Small/Mid Cap Equity1.86411.261
IA Clarington Cdn Conservative Eqty31-Oct-072.42Canadian Equity7.03410.471
Mackenzie Cundill Cdn Security 'A'30-Jun-062.14Canadian Focused Equity7.38410.361
CI Signature High Income28-Sep-071.54Canadian Equity Balanced2.74410.321
Acuity High Income31-Jan-072.30Canadian Equity Balanced4.1449.741
ABC American-Value31-Mar-052.00U.S. Small or Mid Cap Equity-7.0848.251
National Bank Dividend28-Sep-071.70Canadian Equity Balanced4.1447.851
Altamira Asia Pacific31-Oct-072.70Asia Pacific Equity9.6644.601
United-US Equity Value Pool Class W28-Sep-070.21U.S. Equity-2.9544.031


© 2007 The Globe and Mail. All rights reserved.

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