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These Canuck funds just don't cut it

rcarrick@globeandmail.com

What We're Looking For

Duds in the Canadian equity fund categories.

Today's Screen

The point of taking on risk in investing is that you put yourself in position to reap better returns than you'd get from keeping your money safe. Like, say, in money market funds, where your money isn't guaranteed but remains insulated from stock and bond market volatility. By this logic, a dud equity fund would be one that makes you less over the long term than the average Canadian money market fund.

What follows is a list of the biggest funds in the Canadian equity categories with returns that were equal to or less than the average money market fund over the 10 years to July 31, which was 2.6 per cent. To show how a fund is doing lately, we have also included quartile rankings for the past 12 months. Quartiles divide funds in a category into four groups according to their returns - first quartile is best, fourth is worst.

What We Found

Some names you might expect, like AIC Advantage, and some you probably wouldn't expect, like PH&N Growth. Once a high flier, AIC Advantage was loaded with the kind of financial stocks that were annihilated in 2007-08. The fund has surged lately thanks to rebounding bank stocks, but an investment in it over the past decade was essentially dead money.

PH&N Canadian Growth is supposed to be a Canadian equity fund you can buy and forget because of its conservative management and low fees. But the fund's 10-year return of 2.6 per cent is well below the peer average of 4.9 per cent over the past decade (the S&P/TSX composite made 6.5 per cent). Also, the fund lost 38.3 per cent in 2008, which is just over 7.5 percentage points worse than average.

Mackenzie Ivy Canadian is an interesting case because it's a conservatively run fund that protects investors laudably well in down markets - down 15.8 per cent last year - but lies there like a plate of warm beer when stocks are rising fast.

Canadian equity funds that have done worse over the past 10 years than the average Canadian Money Market fund
(ranked by largest assets)
(As of July 31/09)Latest(July 31)1-yr
Fund nameCategory Assets ($-mil)MER10-yr % rtnQuartile
Mackenzie Ivy CanadianCanadian Focused Equity1846.12.382.4%2
Investors Summa SRI FundTM CCanadian Focused Equity1122.32.851.9%4
AIC Diversified CanadaCanadian Focused Equity662.12.461.8%3
AIC AdvantageCanadian Focused Equity525.22.420.2%2
CI Canadian Small/Mid CapCanadian Small or Mid Cap Equity442.32.311.5%3
CIBC Canadian EquityCanadian Equity399.32.212.5%3
AIC Advantage IICanadian Focused Equity332.12.68-0.3%2
MD SelectCanadian Equity300.61.472.2%4
Mackenzie GrowthCanadian Focused Equity296.02.402.5%4
Ethical GrowthCanadian Focused Equity294.42.301.7%3
CIBC Canadian Equity ValueCanadian Equity237.42.011.9%1
Desjardins Canadian Small Cap EquCanadian Small or Mid Cap Equity196.62.192.0%4
AGF Canadian Small CapCanadian Small or Mid Cap Equity192.72.710.2%4
PH&N Canadian Growth-DCanadian Focused Equity187.71.182.6%3
Renaissance Canadian GrowthCanadian Focused Equity182.52.492.5%3
AGF Canadian ValueCanadian Focused Equity154.12.380.8%1
Investors Retirement High Gwth Po-CCanadian Focused Equity122.43.001.4%2
Investors Cdn Small Cap Growth-CCanadian Focused Small/Mid Cap Equity116.52.85-1.9%4
Tradex Equity Fund LimitedCanadian Focused Equity79.21.282.5%4
Acuity Clean Environment EquityCanadian Focused Small/Mid Cap Equity77.62.92-0.3%4
ABC Fully-ManagedCanadian Focused Small/Mid Cap Equity75.62.002.1%4
PH&N Vintage-DCanadian Focused Small/Mid Cap Equity46.51.791.4%4
Natcan QSSP II Investment Fund Inc.Canadian Small or Mid Cap Equity45.03.39-1.7%1
Stone & Co. Flagship Stock BCanadian Focused Equity25.83.292.6%4
Mavrix Sierra EquityCanadian Focused Small/Mid Cap Equity4.62.93-3.7%4
Sceptre Global Equity-AGlobal Equity4.62.61-7.0%4
Caldwell CanadaCanadian Small or Mid Cap Equity3.02.75-5.1%4
Mackenzie STAR Cdn Max Equ GrowthCanadian Focused Equity2.22.650.1%3
Mavrix Canadian GrowthCanadian Small or Mid Cap Equity1.63.25-20.9%4
Fairlane GrowthCanadian Small or Mid Cap Equity0.9%4
Source: Globefund

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