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Top funds beat peers, benchmarks in tough year

As the recession and credit crisis caused markets to tumble, 'there were only a few categories that ended up in the black'


The stock market carnage left many mutual funds in the red last year, but there were still many that outperformed their rivals to emerge as winners of Lipper Awards.

U.S.-based global fund data and analysis provider Lipper Inc. handed out a multitude of awards last night in Toronto for funds in most asset categories for performance over one-, three-, five- and 10-year periods.

These awards put the spotlight on funds that "did better than their peers and in many cases better than their benchmarks even though they [may or may not have] lost money," said Jeff Tjornehoj, a Denver-based research manager with Lipper.

"It absolutely was a difficult year in 2008 to produce positive returns," he said. "There were only a few categories that ended up in the black."

The Lipper Awards are given to funds with the highest "risk-adjusted returns," or best returns with lower risk to investors. "Even an index fund has a level of risk associated with it," Mr. Tjornehoj said.

Global bond funds typically outperform during major stock market downturns or financial crises because of a flight to safety. The depreciation of the Canadian dollar against the U.S. greenback also helped to boost returns last year since many bonds are in U.S. dollars.

CIBC Global Bond Index Fund - the Lipper Award winner for one-year performance in the global fixed-income category - also was the best performer in 2008 of all fund categories.

The fund, which aims to track the JP Morgan Global Government Bond Index (excluding Canada), climbed 37.4 per cent last year. Friedberg Foreign Bond, which won in the one-year miscellaneous category, was up 34.5 per cent.

Other funds that ended in positive territory last year and scooped up kudos at the awards show included RBC Canadian Bond Index, which posted an 11-per-cent return; CIBC U.S. Dollar Managed Income Portfolio, up 18.5 per cent; and Altamira Short-term Government Bond, up 8.5 per cent.

Among stock funds, CI Global Biotechnology Corporate Class gained 2.3 per cent in last year's market downturn and won the health care equity category.

For investors, they can use the awards to find the best funds across various time periods. Then they can delve into further research on the funds.

"We provide a variety of awards because there are a variety of investors," said Mr. Tjornehoj, explaining why they give out awards for performance over different time spans.

"There are some people who want to know which managers are the up-and-coming stars, and they want to get in with them while they have some momentum.

"Others are looking at long-term performance. They are less concerned with managers that are doing well now, and want to know who has done well for over the last decade," he added. "It would be impossible to come up with a set of awards that are universally appealing."

For instance, Mackenzie Ivy Foreign Equity, which is run by Paul Musson and now retired Jerry Javasky, won for one-year performance in the global equity category. The fund lost 7 per cent in 2008. But Mutual Discovery, run by Charles Lahr and Anne Gudefin, took the top award for three- and five-year performance. The fund posted an average annual loss of 3.1 per cent for three years ended Dec. 31, 2008, and an annualized return of 2.5 per cent over five years. Mackenzie Cundill Value Fund, run by Peter Cundill and Tony Massie, won for a 10-year period after generating an annualized return of 8 per cent.

Seeing a fund flagged as a Lipper Award winner "doesn't mean that it is the end of your research," Mr. Tjornehoj said. "There is no award given that provides a complete answer for investors."

Lipper also hands out awards for best performance across groups or families of funds. Royal Bank of Canada, which owns RBC Asset Management Inc., won for the bond category. Calgary-based Mawer Investment Management Inc. took top honours in the equity group. And AGF Management Ltd. won for the balanced fund category, and also an "overall" award for bond, equity and balanced funds.

Each fund family must have a minimum number of products to be considered for the group awards, such as having at least three in the bond category or five in the equity group.

"These are going to be household names that are going to be in contention for the overall awards," Mr. Tjornehoj said.


Lipper Fund Awards - Canada Final List for 1-Year Awards - Major Categories
CIFSCFund NamePromoter Fund Manager
Canadian Dividend & Equity IncBeutel Goodman Canadian DividendBeutel GoodmanNorman MacDonald, Mark Thomson
Canadian EquityIA Clarington Canadian LeadersIA ClaringtonPierre Bernard
Canadian Equity BalancedAGF Canadian BalancedAGF TorontoChristine Hughes
Canadian Fixed IncomeRBC Canadian Bond IndexRoyal Bank of CanadaSuzanne Gaynor
Canadian Fixed Income BalancedCIBC US Dollar Managed Income PortfolioCIBCTeam Managed
Canadian Focused EquityBeutel Goodman Canadian IntrinsicBeutel GoodmanTeam managed
Canadian Income Trust EquityFidelity Income Trust Series AFidelityCecilia Mo
Canadian Neutral BalancedStandard Life Moderate Portfolio A SeriesStandard LifeTeam Managed
Canadian ShTrm Fixed IncomeAltamira Short Term Government BondAltamiraNatcan Investment Management Team
Canadian Small/Mid Cap EquityDynamic Focus + Small BusinessGoodmanOscar Belaiche, Jason Gibbs
European EquityMac Ivy European ClassMackenziePaul Musson, Jerry Javasky
Global EquityMac Ivy Foreign Equity AMackenzieJerry Javasky, Paul Musson
Global Equity BalancedMac Ivy Global BalancedMackenzieJerry Javasky, Paul Musson
Global Fixed IncomeCIBC Global Bond IndexCIBCDenis Senecal
Global Neutral BalancedCIBC US Managed Balanced PortfolioCIBCTeam Managed
Global Small/Mid Cap EquityChou AsiaChou Associates ManagementFrancis Chou
High Yield Fixed IncomePhillips, Hager&North High Yield Bond DPhillips, Hager & NorthPH&N's Fixed Income Team
International EquityRenaissance International EquityCIBCTeam Managed
Natural Resources EquityDynamic Focus + Energy Income TrustGoodmanOscar Belaiche, Andrew Taylor
US EquityBeutel Goodman American EquityBeutel GoodmanBrian Brownlee, Franceline Fortin

© 2007 The Globe and Mail. All rights reserved.

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