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Mutual Fund News

My, what a difference five months can make


How much financial services funds have snapped back in the recent stock market rally.

At the end of February, the year-to-date returns of this asset class were mired in red ink with losses as high as over 30 per cent for AIC Global Advantage Fund.


We checked out the year-to-date returns of financial services funds until Thursday of this week. We included Horizons BetaPro exchange-traded funds, which aims to give double the daily return of the S&P/TSX capped financial services subindex, and the Claymore CDN Financial Monthly ETF in the global equity balanced category. U.S.-dollar and duplicate funds were excluded.


Five months can make a night-and-day difference.

HBP S&P/TSX Financials Bull ETF (HFU-TSX), the second worst-performer in late February with a 29-per-cent loss, has risen to the top of the heap with a robust 61.5-per-cent gain.

And HBP S&P/TSX Financial Bear ETF (HFD-TSX), the best performer nearly five months ago with a 19.4-per-cent gain, is now in the basement with a 62.4-per-cent loss. An investor, who was bearish on financials at the start of the year and kept holding this ETF, would be severely under water now.

Among the mutual funds and conventional ETFs, the Claymore Equal Weighted Banc & Lifeco ETF (CEW-TSX) is the top performer this year. It only has 10 holdings, including the big five Canadian banks and four insurers.

It has benefited from the fact that Canadian financial sector, which was "hit the hardest" among the sub-indexes in the S&P/TSX Composite in 2008, has been the biggest gainer this year, says Vlad Tasevski, analyst at Claymore Investments Inc.

Canadian financials got whacked because they were tarred with the same brush as U.S. financial institutions that took writedowns stemming from the subprime mortgage crisis. "The Canadian banks were in a much better position than the U.S. banks because they have more conservative lending practices," says Mr. Tasevski.

The iShares CDN Financial Service Sector ETF (XFN-TSX), which tracks the Canadian financial sub-index, has gained 34.7 per cent. It is more diversified than the Claymore ETF, and includes smaller banks and mutual fund companies. Canadian financials have fared better than its U.S. counterparts. The S&P 500 financials sub-index is off 10 per cent this year in Canadian dollar terms.

Claymore Canadian Financial Monthly Income ETF (FIE-TSX) is up 20.8 per cent. This ETF also invests in fixed-income securities and can own up to 25 per cent in non-financials.

The worst performing mutual fund is CI Global Financial Services Corp. with a 2-per-cent loss. It is being merged into CI Gobal Value Class around August 14. A rising loonie can play havoc with returns of Canadian-dollar funds that own foreign stocks unless they are hedged.


How financial services funds are faring so far this year
Assets ($-mil)LatestYTD % rtnCalender year % returns
Fund nameCategory June 30MERJuly 23June 3020082007200620052004200320022001
HBP S&P/TSX Financials Bull + ETFAlt. Strategies79.461.543.4-67.4
Claymore Equal Wght Banc&Lifeco ETFFin. Svc. Equity22.037.628.5-36.8
Trans IMS Cdn Financial ServiceFin. Svc. Equity3.93.9036.328.3-40.2-2.913.223.616.326.7-16.9-9.2
iShares CDN Financial Sector IndexFin. Svc. Equity932.60.5534.726.7-35.8-1.321.
DKAM Financial Services VentureFin. Svc. Equity8.42.5022.6
Claymore Cdn Financial Monthly IncGlob. Equ. Bal.126.220.816.1-35.0-5.511.2
CIBC Financial CompaniesFin. Svc. Equity217.82.6120.514.9-39.8-11.717.315.010.718.9-10.1-4.4
AIC Global Wealth ManagementFin. Svc. Equity5.82.6319.916.6
Dynamic FocusPlus Wealth MgmtFin. Svc. Equity162.12.6115.211.0-34.1-5.213.526.712.323.3-13.5-3.2
Investors Glo Financial Services-CFin. Svc. Equity37.22.8513.111.0-45.7-24.529.411.54.915.2-13.1
AIC Global AdvantageFin. Svc. Equity27.92.8011.04.8-57.4-23.522.
AIC American AdvantageFin. Svc. Equity30.02.798.74.1-45.9-21.912.38.7-4.73.1-17.5-9.3
Fidelity Glbl Financial Serv.-AFin. Svc. Equity11.82.656.36.2-37.2-17.026.822.48.06.6-14.4-4.9
CI Global Fin Services Corp ClFin. Svc. Equity28.02.33-2.0-1.0-26.4-25.515.38.67.614.0-16.9-11.7
HBP S&P/TSX Financials Bear + ETFAlt. Strategies71.5-62.4-56.851.0
S&P 500 Composite8.11.8-38.53.513.
S&P/TSX Capped Financials31.023.7-38.3-3.815.020.616.524.4-5.01.1
S&P/TSX Composite Index18.815.4-
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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