WHAT WE'RE UP TO
Searching for equity funds that let you sleep at night.
First, we gathered funds in all major equity categories and isolated those with the lowest levels of volatility, which is one gauge of the risk level in owning an investment product. Lower-volatility funds are defined here as being those with score of 0.8 or less using a measurement called beta. A fund with a beta of 1.0 is said be just as volatile as its benchmark stock index. The lower the beta, the more muted its volatility is in comparison to the index.
Next, all the funds with betas of 0.8 per cent or less were ranked according to their returns for the year through Aug. 31. For a longer-term view, we also displayed each fund's quartile ranking over the past five years. Quartiles divide funds in a category into four groups - first quartile is best, and fourth is at the bottom.
So what did we turn up?
First off, it's important to note that all major global stock indexes are down for the year, including the S&P/TSX composite index. So it's a testament to a fund's safety orientation if it has stayed in positive territory through 2008. A total of 16 low-beta funds are in positive territory for the year, and another eight have held their losses to less than 1 per cent.
Many of the low-beta funds that made money so far this year have less than stellar five-year performances. This brings us to a fuller understanding of low-volatility investing - it may protect you from the worst of a down market, but it also can prevent you from enjoying the highest highs of a strong market.
There are some exceptions here and, oddly, many of them are in the Canadian dividend and income category, where many funds have been weighed down by their exposure to a weak financial sector. Stone & Co. Dividend Growth Class Canadian A has managed to combine first quartile performance over the past five years with a very solid gain in the challenging environment of 2008. Dynamic Dividend Value, Ethical Dividend and Scotia Canadian Dividend also stand out for having offering low volatility and good short- and medium-term gains.
Mackenzie Universal Canadian Growth looks to be an interesting package: half the volatility of the index and very strong returns in the past couple of years.
Low Beta Equity Funds
|As of Aug. 31, '08|
|Assets ('000)||3-year||YTD %||5-year|
|Fund name||Category||as of Aug. '08||Beta||return||Quartile|
|Dynamic FocusPlus Equity||Canadian Focused Equity||299,532||0.48||5.83%||3|
|Marquest Dividend Growth||Canadian Small or Mid Cap Equity||0.67||5.28%||1|
|IA Clarington Cdn Conservative Eqty||Canadian Equity||272,243||0.75||4.80%||4|
|Mackenzie Univ Canadian Growth||Canadian Focused Equity||1,036,709||0.50||4.21%||3|
|Stone & Co. Div Growth Cls Can A||Canadian Dividend and Income Equity||141,797||0.75||3.22%||1|
|Altamira Precision US Midcap Index||U.S. Small or Mid Cap Equity||12,556||0.66||2.67%||2|
|Dynamic Dividend Value||Canadian Focused Equity||388,327||0.78||1.75%||1|
|Mulvihill Total Return||Global Equity||0.22||1.73%||2|
|BMO U.S. Special Equity||U.S. Small or Mid Cap Equity||22,520||0.79||1.48%||4|
|RBC North American Value||Canadian Focused Equity||157,212||0.69||1.06%||1|
|Beutel Goodman Canadian Intrinsic||Canadian Focused Equity||2,269||0.35||0.95%||3|
|AIC Canadian Focused||Canadian Focused Equity||405,736||0.59||0.61%||3|
|imaxx Canadian Equity Value||Canadian Focused Equity||42,845||0.78||0.41%||4|
|Ethical Canadian Dividend||Canadian Dividend and Income Equity||283,952||0.76||0.35%||1|
|Scotia Canadian Dividend||Canadian Dividend and Income Equity||2,375,539||0.71||0.30%||1|
|AGF Dividend Income||Canadian Dividend and Income Equity||742,671||0.71||0.08%||1|
|Altamira Select American||U.S. Small or Mid Cap Equity||38,739||0.78||-0.19%||4|
|Beutel Goodman Small Cap||Canadian Small or Mid Cap Equity||276,630||0.68||-0.46%||3|
|RBC Canadian Dividend||Canadian Dividend and Income Equity||9,633,758||0.72||-0.46%||1|
|IA Clarington Canadian Dividend||Canadian Dividend and Income Equity||2,073,512||0.72||-0.54%||3|
|Renaissance Millennium High Income||Canadian Small or Mid Cap Equity||991,982||0.57||-0.57%||3|
|TD Dividend Growth||Canadian Dividend and Income Equity||3,013,972||0.63||-0.70%||1|
|Chou Associates||Global Small/Mid Cap Equity||604,359||0.44||-0.75%||3|
|Mackenzie Ivy Canadian||Canadian Focused Equity||2,607,618||0.30||-0.75%||4|
|Standard Life US Mid Cap-A||U.S. Small or Mid Cap Equity||7,586||0.64||-1.18%||3|
|Mackenzie Ivy Foreign Equity||Global Equity||2,279,380||0.68||-1.38%||3|
|Manulife U.S. Mid-Cap Value Class||U.S. Small or Mid Cap Equity||62,299||0.64||-1.64%||2|
|Dynamic FocusPlus Small Business||Canadian Small or Mid Cap Equity||74,722||0.51||-1.72%||1|
|CI Can-Am Small Cap Corporate Class||Canadian Small or Mid Cap Equity||92,558||0.58||-1.79%||1|
|Saxon World Growth||Global Small/Mid Cap Equity||298,363||0.78||-2.25%||4|
|United Cdn Small Cap Eq Pool-W||Canadian Small or Mid Cap Equity||190,358||0.64||-2.36%||1|
|ABC Fully-Managed||Canadian Focused Small/Mid Cap Equity||113,525||0.77||-3.05%||4|
|Diplomat Maximum Growth Portfolio||Global Equity||6,677||0.78||-4.58%||2|
|Compass Growth Portfolio||Global Equity||197,804||0.78||-4.99%||1|
|Scotia Selected Agg Gwth Portfolio||Global Equity||121,522||0.69||-5.09%||2|
|Strategic Agg Growth Reg Pt 1-Ver 2||Global Equity||0.79||-6.31%||1|
|Strategic Agg Growth NR Pt 1-Ver 2||Global Equity||0.79||-6.33%||1|
© 2007 The Globe and Mail. All rights reserved.
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