What We're Looking For
High-cost mutual funds that have justified their fees.
Mutual fund companies apply the ongoing fees they charge against fund returns, so it makes good sense to look at low-cost funds. If you pay less, you put yourself in a position to make more. Still, the fact remains that there are lots of high-cost funds out there, and some of them have performed well.
To highlight them, we took funds in all categories with a management expense ratio of at least 2.50 per cent - that's a high but not crazy MER - and ranked them by their asset size.
We then refined the list by including only those with five-year returns that were first or second quartile over the five years to July 31. Quartile rankings compare returns for a particular category and then break the results down into four groups. First quartile is best, fourth is worst.
What We Found
Several funds from Investors Group, which is the country's second-largest fund company and one of its highest-cost players. It's good to see Investors Dividend on this list because it's the biggest non-money market mutual fund in Canada, with assets of $12-billion.
Note that the MER for the A version of Investors Dividend is 2.68 per cent, which seems bloated in comparison both to the average of 2.54 per cent of its peers and to sub-2 per cent MERs of many other large dividend funds. The high cost of Investors Dividend helps explain why it was a little worse than average in last year's tough markets.
Check out the 4.09 per cent MER on Dynamic Power Canadian Growth - it reflects performance fees that were racked up as this fund built up its five-year, first-quartile returns. Hidden in all of these numbers is the fact that this fund lost just over half its value last year.
Yes, investors should always dig deep when researching funds.
|High Fee Funds (ranked by largest assets)|
|(As of July 31/09)||Latest||(July 31)||5-yr|
|Fund name||Category Assets ($-mil)||MER||5-yr % rtn||Quartile||MER Date|
|Investors Dividend A||Canadian Equity Balanced||12,002.6||2.68||4.4%||2||7/31/2009|
|Investors Income Plus Portfolio A||Canadian Fixed Income Balanced||3,654.9||2.46||4.2%||1||7/31/2009|
|Investors Real Property A||Miscellaneous||3,512.1||2.56||5.0%||2||7/31/2009|
|Investors Cdn Large Cap Value A||Canadian Focused Equity||2,507.9||2.68||8.3%||1||7/31/2009|
|Investors Canadian Equity A||Canadian Focused Equity||2,307.5||2.68||3.9%||2||7/31/2009|
|Investors U.S. Large Cap Value A||U.S. Equity||1,690.8||2.69||-4.6%||2||7/31/2009|
|Dynamic Power Canadian Growth||Canadian Focused Equity||1,557.3||4.09||9.9%||1||6/30/2008|
|Investors Canadian Balanced A||Canadian Equity Balanced||1,467.0||2.68||5.6%||2||7/31/2009|
|Investors Global A||Global Equity||1,422.7||2.69||3.3%||1||7/31/2009|
|Dynamic Power Balanced||Canadian Neutral Balanced||1,274.7||2.99||9.6%||1||6/30/2008|
|IG FI Canadian Allocation A||Canadian Equity Balanced||1,248.7||2.68||6.5%||1||7/31/2009|
|Investors Retirement Plus Port. A||Canadian Neutral Balanced||1,203.2||2.56||5.2%||1||7/31/2009|
|Allegro Moderate Portfolio A||Global Equity Balanced||1,167.5||2.65||2.2%||1||7/31/2009|
|Tmpltn International Stock||International Equity||1,059.6||2.57||0.8%||1||7/31/2009|
|Investors Retirement Gwth. Port. A||Canadian Focused Equity||950.4||2.84||6.0%||1||7/31/2009|
|Investors Tact Asset Allocation A||Global Equity Balanced||908.5||2.90||4.1%||1||7/31/2009|
|Primerica Growth||Global Equity Balanced||897.6||2.51||3.8%||1||7/31/2009|
|AGF International Stock Class||International Equity||879.9||2.83||1.2%||1||7/31/2009|
|Brandes International Equity||International Equity||784.8||2.57||-1.0%||2||7/31/2009|
|Investors Euro Mid-Cap Equity A||European Equity||751.6||2.69||3.2%||1||7/31/2009|
|AGF European Equity Class||European Equity||725.8||2.89||0.4%||2||7/31/2009|
|AGF Emerging Markets||Emerging Markets Equity||646.9||2.83||16.7%||1||7/31/2009|
|Investors North American Equity A||North American Equity||625.1||2.68||1.2%||2||7/31/2009|
|AGF Canadian Growth Equity||Canadian Small or Mid Cap Equity||613.6||2.87||2.3%||2||7/31/2009|
|Primerica Aggressive Growth||Global Equity||585.6||2.60||3.0%||1||7/31/2009|
|Investors Cdn. Natural Resource A||Natural Resources Equity||580.3||2.69||10.6%||2||7/31/2009|
|Dynamic Global Discovery||Global Equity||571.2||2.70||6.5%||1||6/30/2008|
|IG AGF Canadian Growth A||Canadian Focused Equity||569.4||2.69||4.3%||2||7/31/2009|
|IG AGF Canadian Balanced A||Canadian Neutral Balanced||568.4||2.94||5.1%||1||7/31/2009|
|Renaissance Global Health Care||Health Care Equity||547.1||3.14||-0.6%||3||2/27/2009|
|Dynamic Precious Metals||Precious Metals Equity||546.7||2.69||16.8%||1||6/30/2008|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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