What We're Looking For
Popular mutual funds that have excellent long-term records, but haven't done so well recently. In other words, opportunities to buy low.
An excellent long-term record is defined here as meaning a 10-year compound average annual return that ranks in the first quartile. Quartiles divide funds in a category into four groups according to their returns, and the first quartile is the best place to be.
To find lagging funds, we narrowed our list by keeping only funds that rank in the third or fourth quartile for the most recent 12 months. Finally, we ranked the funds from the largest on down, as measured by their assets.
What We Found
The stock markets have rebounded smartly, but not all funds have fully participated. This presents an opportunity in the case of funds such as RBC Dividend, which stacks up well against other dividend funds over the long term.
What, you prefer to deal with Bank of Montreal, Bank of Nova Scotia or Toronto-Dominion Bank? Their dividend funds are also on this list of long-term studs that have lagged at least a little bit in the 12 months to July 31.
Sprott Canadian Equity's 10-year average annual return of 22 per cent certainly stands out, but so does the fund's one-year drop of 39 per cent. The fund is now in the fourth quartile for its category, which raises the question of what happened the last time this fund was in the basement. That was in 2005; the next year, the fund was back to first quartile.
Don't procrastinate if you're looking at any funds on this list of laggards. Some have been on a tear lately, which means the opportunity to buy them at a low point is disappearing.
|Fallen Stars - (ranked by largest assets)|
|(As of July 31/09)||Latest||% return (as of July 31)|
|Fund name||Category Assets ($-mil)||MER||1-yr||10-yr|
|RBC Canadian Dividend||Canadian Dividend and Income Equity||8,986.9||1.70||-10.1%||9.1%|
|CIBC Monthly Income||Canadian Neutral Balanced||5,849.9||1.41||-8.5%||7.8%|
|RBC Select Balanced||Global Neutral Balanced||4,814.2||1.85||-8.3%||3.3%|
|BMO Dividend||Canadian Dividend and Income Equity||4,019.9||1.71||-10.2%||8.8%|
|TD Dividend Income-I||Canadian Equity Balanced||3,066.7||1.92||-9.1%||7.8%|
|TD Dividend Growth||Canadian Dividend and Income Equity||2,933.1||1.92||-10.2%||9.6%|
|CI Signature High Income||Global Neutral Balanced||2,864.4||1.52||-10.3%||8.9%|
|TD Canadian Equity||Canadian Focused Equity||2,469.6||2.07||-28.4%||6.5%|
|SEI Canadian Equity-O||Canadian Equity||2,251.0||0.13||-19.4%||9.5%|
|Scotia Canadian Dividend||Canadian Dividend and Income Equity||2,079.3||1.64||-13.6%||8.2%|
|Dynamic Power Canadian Growth||Canadian Focused Equity||1,557.3||4.09||-31.7%||9.8%|
|Fidelity Canadian Balanced-A||Canadian Neutral Balanced||1,292.6||2.22||-6.6%||7.3%|
|Dynamic Power Balanced||Canadian Neutral Balanced||1,274.7||2.99||-10.3%||8.6%|
|Trimark Fund-SC||Global Equity||1,225.8||1.60||-21.4%||1.4%|
|MD Dividend||Canadian Equity Balanced||1,197.2||1.44||-8.7%||6.4%|
|Sprott Canadian Equity||Natural Resources Equity||1,184.0||2.81||-39.3%||22.0%|
|Dynamic FocusPlus Balanced||Canadian Neutral Balanced||1,167.5||2.37||-8.8%||7.0%|
|National Bank Mortgage||Canadian Short Term Fixed Income||1,154.9||1.67||4.1%||4.9%|
|National Bank Dividend||Canadian Fixed Income Balanced||1,128.9||1.71||-6.4%||5.7%|
|RBC O'Shaughnessy Canadian Equity||Canadian Focused Equity||1,096.1||1.47||-25.0%||7.7%|
|RBC North American Growth||Canadian Focused Equity||1,087.1||1.99||-21.0%||6.8%|
|CI Synergy Canadian Corporate Class||Canadian Focused Equity||1,041.3||2.31||-19.8%||6.6%|
|Acuity High Income||Canadian Equity Balanced||993.1||2.37||-10.5%||8.4%|
|AIM Canadian Balanced||Canadian Neutral Balanced||932.5||2.35||-7.2%||6.0%|
|Dynamic Canadian Dividend Fund||Canadian Focused Equity||918.6||2.43||-21.3%||7.4%|
|Primerica Growth||Global Equity Balanced||897.6||2.51||-13.3%||4.0%|
|Dynamic Value Balanced||Global Neutral Balanced||885.8||2.38||-9.2%||8.0%|
|Integra Diversified||Canadian Neutral Balanced||862.9||0.86||-7.6%||5.3%|
|RBC O'Shaughnessy U.S. Value||U.S. Equity||738.0||1.47||-29.0%||-0.1%|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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