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Mutual Fund News

Down but not out: Bet on these for the long term

rcarrick@globeandmail.com

What we're up to

Another in a continuing series of Number Crunchers designed to present some opportunities for doing something that people don't do often enough, which is buy good mutual funds when they're down in price.

Today's search

How do we know a fund is a good product? Here, we'll judge by looking only at those with a first-quartile ranking over the past 10 years. Quartiles divide funds in a category into four groups, with the first being tops and the fourth being the dregs. To find the quality funds that are now on sale, we looked only at those top quartile funds over the past 10 years that have fallen 15 per cent or more in the 12 months to July 31.

So what did we turn up?

An interesting mix of big, small and obscure funds in just about all categories. What they all share is a record of beating the competition in the long term, even while they've struggled in the near term.

Looking for some non-North American exposure for your portfolio? Mawer World Investment is an outstanding name that, even while losing 15.1 per cent in the past year, has been above average. If that 10-year compound average annual return of 5 per cent doesn't impress, then consider that the average international equity fund made just 0.9 per cent. Need some U.S. market exposure? North Growth U.S. Equity and RBC O'Shaughnessy U.S. Value have 10-year results that are vastly better than the category's average annual loss of 1.6 per cent.

Small and mid-sized companies have been treated especially roughly in the past year or so. If you can stand the risks of buying in now, then our list offers several possibilities. Forget about the Norrep Fund, though. It's closed to new clients.

High net worth investors, your attention is directed to a pair of funds on the list, McElvaine Investment Trust B, which requires a minimum upfront investment of $25,000, and ABC American-Value, which requires $150,000 to get in. The former fund is run by Tim McElvaine, who is known to savvy investors for a value investing style that has produced far above average 10-year numbers. The ABC fund is run by Irwin Michael, another of the value school's ace bargain hunters.

10-year 1st Quartile Rank with Loss greater than 15%

Fund NameCategory(as of July '08) Assets ($-mil)Latest MER% return (as of July 31 '08): 1-year% return (as of July 31 '08): 10-year
Mawer World InvestmentInternational Equity352.51.43-15.15.0
Investors U.S. Large Cap Value-CU.S. Equity2,057.32.87-16.30.0
Sceptre Equity Growth-ACanadian Small or Mid Cap Equity524.41.58-16.314.7
BMO North American DividendNorth American Equity82.22.35-16.53.3
GBC International GrowthInternational Equity146.21.91-17.23.4
TD Asian GrowthAsia Pacific ex-Japan Equity169.42.76-17.29.6
Norrep FundCanadian Small or Mid Cap Equity121.22.49-17.422.6
Dynamic Global Value FundGlobal Equity499.92.56-17.64.0
Trimark Fund-SCGlobal Equity1,943.41.62-18.45.0
GGOF American Equity Fund Ltd ClassU.S. Equity14.52.21-18.50.4
North Growth U.S. EquityU.S. Equity221.21.20-19.17.3
TD Entertainment & CommunicationsGlobal Equity117.72.70-19.76.1
RBC O'Shaughnessy U.S. ValueU.S. Equity1,111.51.47-20.24.7
Excel IndiaMiscellaneous272.23.15-21.414.2
Trimark EuroplusEuropean Equity316.82.44-22.24.7
AGF International Stock ClassInternational Equity1,328.32.85-22.75.4
Dynamic Far East ValueAsia Pacific Equity55.53.02-23.25.3
CIBC International Small CompaniesInternational Equity126.52.77-23.46.7
AGF European Equity ClassEuropean Equity1,195.52.95-24.74.6
Trimark Canadian Small CompaniesCanadian Focused Small/Mid Cap Equity160.72.43-24.910.4
McElvaine Investment Trust-BCanadian Focused Small/Mid Cap Equity67.80.60-26.111.0
Dynamic Venture Opport Series IRetail Venture Capital45.03.99-26.24.6
ABC American-ValueU.S. Small or Mid Cap Equity72.02.00-27.06.0

SOURCE: GLOBEFUND

© 2007 The Globe and Mail. All rights reserved.

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