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Hard to beat home-spun returns by going global

WHAT ARE WE LOOKING FOR?

Whether it's been worth going global.

When it comes to investing, we have all heard about not putting our eggs in one basket. And Ottawa helped investors pursue geographic diversification beyond Canada by lifting foreign content limits in retirement savings plans in 2005.

TODAY'S SEARCH

We looked at the average annual returns for all global equity funds up to 15 years to see how they have performed compared with the Canadian market. We also excluded U.S. dollar and duplicate funds.

WHAT DID WE FIND?

It depends on the length of the investment period.

Over 15 years, only Mackenzie Ivy Foreign Equity and Mackenzie Cundill Value beat the 6.5-per-cent average annual return for the S&P/TSX Composite Index, but not including reinvested dividends. With these two exceptions, investors would have better off buying an index fund tracking the Canadian market.

When the resource sector was on fire - as it had been over the shorter term - it was certainly better to be invested in Canada than in a global equity fund. Currency fluctuations can also play havoc with the returns of foreign stock funds, particularly when the loonie is strong.

Mackenzie Cundill Value, however, does hedge a significant part of its foreign-currency exposure. This fund was started by investment veteran Peter Cundill, but he has retired. It is now run by Andrew Massie and Jim Thompson, who was hired this year as Mr. Cundill's successor.

Over the one-year period to June 30, Mackenzie Ivy Foreign Equity rose to the top of the heap - not only among this group of foreign funds - but it also beat the Canadian market with a mere 2.1-per-cent loss.

For most of its life, this conservative, value-oriented fund was run by a team led by Jerry Javasky, who was known for holding high cash positions of 20 per cent or more in the earlier years. He handed the reins to co-manager Paul Musson after retiring this year. More recently, the fund has held less than 10 per cent in cash.

What is interesting is that the performance of Mackenzie Ivy Foreign Equity and Cundill Value have overtaken rivals such as Trimark Fund and Templeton Growth Fund - the high-profile, go-to global equity funds during the 1990s.

Both Trimark Fund and Templeton Growth have had several manager changes over the past 15 years. For example, Dana Love took over as lead manager of Trimark Fund early last year, after the departure of Tye Bousada to start EdgePoint Wealth Management Inc.

How global equity funds have fared over 15 years
(As of June 2009)Latest(July 9)(June 30)(As of June 30, 2009)
NameAssets (millions)MERYTDYTD1YR3YR5YR10YR15YR
Mackenzie Ivy Foreign Equity1935.12.43-2.9%-1.2%-2.1%-0.4%0.1%2.1%7.1%
Mackenzie Cundill Value 'A'*197.62.10-2.8%0.6%-14.8%-6.8%-0.5%5.2%6.6%
Trimark Fund-SC1251.31.60-2.6%-0.2%-22.6%-7.6%-3.9%1.7%5.9%
Acuity Pooled Global Equity3.40.26-4.0%-0.4%-26.5%-8.4%-4.4%-2.0%5.3%
Dynamic Global Value Fund621.32.4918.8%23.0%-22.8%-6.2%2.1%1.4%5.2%
Investors Global-C1389.32.858.3%13.1%-16.7%-2.4%2.2%0.6%4.5%
AGF Global Value1342.32.78-3.1%0.0%-22.6%-12.4%-8.2%-2.7%4.2%
Trimark Select Growth2267.22.42-7.4%-5.8%-22.9%-11.6%-6.7%-0.1%4.1%
Investors Growth Portfolio-C270.32.996.1%11.4%-17.9%-4.4%0.0%-0.3%4.0%
MD Growth2135.81.44-3.8%-0.9%-17.7%-8.1%-3.8%-1.4%3.9%
Templeton Growth Fund Ltd.2058.12.23-3.0%-0.2%-20.5%-8.3%-3.6%-1.5%3.1%
Educators Global10.81.95-6.8%-3.6%-22.9%-8.2%-3.3%-2.5%2.5%
Fidelity Global-A154.62.572.7%6.2%-22.4%-11.5%-5.3%-3.7%2.5%
TD Global Select543.92.421.6%4.7%-13.0%-7.3%-2.9%-3.4%2.2%
CI Global643.42.332.5%6.6%-23.8%-10.7%-5.3%-3.0%2.1%
FÉRIQUE World37.01.25-0.4%3.0%-15.0%-5.9%-1.6%-2.6%2.0%
FMOQ International Equity138.30.95-3.8%-20.9%-8.4%-4.2%-3.8%1.7%
CIBC Global Equity69.52.75-3.1%0.2%-16.9%-7.2%-4.5%-5.0%1.0%
Investors World Growth 95.93.003.9%7.4%-21.4%-6.5%-1.8%-2.6%0.7%
Canada Life Flex (Setanta)63.92.97-0.4%2.8%-18.7%-7.7%-4.8%-6.8%0.7%
Sceptre Foreign Equity Pooled944.2-2.3%1.8%-30.6%-12.3%-4.7%-5.1%0.7%
Ark NorthRoad Global-A3.02.82-7.1%-4.5%-26.0%-16.3%-10.8%-6.3%0.2%
Renaissance Global Markets172.22.50-0.3%3.5%-24.3%-6.7%-3.7%-5.2%0.2%
Desjardins Global Equity Value257.12.48-4.4%-0.3%-29.7%-14.5%-7.4%-4.7%-0.1%
Scotia Global Growth72.62.524.9%8.2%-22.8%-8.7%-5.0%-5.7%-0.6%
Empire Global Equity-Class A38.12.63-4.2%-0.3%-39.3%-16.7%-9.7%-6.7%-0.7%
Sceptre Global Equity-A4.62.61-1.1%3.0%-24.9%-10.2%-5.5%-7.0%-2.4%
IA Ultraflex R-M Global Equities2.73.94-6.5%-3.9%-28.3%-13.3%-9.2%-9.3%-3.4%
MSCI World (Cdn$)1.4%-19.0%-6.2%-2.3%-2.7%4.0%
S&P/TSX Composite Index8.7%15.4%-28.3%-3.7%4.0%4.0%6.5%
S&P/TSX Total Return17.6%-25.7%-0.9%6.6%6.2%8.7%
*The A version is closed to new investors but other versions are still open.
Source: Globe Investor

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swon@globeandmail.com

© 2007 The Globe and Mail. All rights reserved.

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