WHAT ARE WE LOOKING FOR?
How international equity investment funds have fared over the longer term.
These funds must look outside of Canada and the United States, but invest 70 per cent of the assets in developed countries. Because Canadians tend to focus on North America, we'll see whether it has been worth diversifying.
We screened for the best and worst international equity funds over 10 years ended Aug. 31. We included mutual and segregated funds. Pooled, duplicate and U.S. dollar-versions were excluded in addition to those requiring more than a $25,000 minimum.
WHAT DID WE FIND?
It can be lonely at the top. Only four funds made money. The best performer was CI International with an average annual return of nearly 4 per cent. With the S&P/TSX total return of 6.7 per cent, it looks like Canadians didn't need to go outside its borders.
Interestingly, most of the worst performers, which were swimming in red ink, were segregated funds. These investments are sold with guarantees that come with higher fees that eat away at returns. Segregated funds usually promise investors 75 or 100 per cent of their initial investment at maturity - typically 10 years - or upon death. Investors who have a 100-per-cent guarantee and did not use any reset option to lock in gains would at least get back their principal after a decade. Still, they would have done better by investing in a GIC.
While CI International, which is run by William Sterling of Trilogy Global Advisers, was at the top, it seems puzzling that CI International Segregated I was near the bottom with an average annual loss of 6.8 per cent.
Folks at CI Investments explain the big difference in performance to the fact that this segregated fund was formerly invested in the lagging BPI International Equity Fund before being merged in mid-2005 with CI International.
Similarly, Canada Life International Equity (CI), which is invested in CI International, was the worst performer with an average annual loss of 7.9 per cent over a decade. Until late 2007, it had been invested in AIC World Equity (renamed Copernican International Dividend Income).
Mawer World Investment, which has been run by Gerald Cooper-Key of Mawer Investment Management since inception in 1987, was also near the top with an average annual return of 3.2 per cent over 10 years. Since inception, it's posted a compounded annual return of 8.1 per cent.
This week, Mawer announced that Mr. Cooper-Key would retire from the fund next March. The jury is still out as to whether his successors will be able to keep up his impressive long-term record.
|Best International Equity Funds over 10 Years|
|Assets||Latest||YTD %||(As of Aug. 31/09*)|
|Name||Type||($ mil)*||MER %||(Sept.30)||1YR %||3YR %||5YR %||10 YR %|
|CIBC International Small Cos||MF||86.4||2.80||12.0||-18.4||-10.0||1.0||3.2|
|Mawer World Investment||MF||307.8||1.47||23.1||-8.8||-1.9||5.1||3.1|
|AGF International Stock Class||MF||947.1||2.83||19.9||-10.5||-5.9||3.2||2.2|
|Integra International Equity||MF||59.0||1.31||6.1||-17.5||-5.2||2.2||-0.1|
|Bissett International Equity-F||MF||3.7||1.57||13.8||-11.1||-6.7||0.5||-0.7|
|Desjardins Overseas Equity Value||MF||981.6||2.58||13.3||-18.7||-10.0||-0.7||-0.9|
|CI International Value||MF||535.3||2.36||8.6||-4.7||-6.1||-0.3||-0.9|
|Altamira Intl Currency Neutral Idx||MF||79.5||0.57||18.3||-19.2||-8.8||2.2||-0.9|
|RBC Intl Index Currency Neutral||MF||248.6||0.67||18.6||-16.0||-8.1||2.6||-1.0|
|Beutel Goodman Int'l Equity||MF||76.8||1.42||7.9||-13.7||-7.3||-1.2||-1.1|
|Tmpltn International Stock||MF||1094.8||2.57||19.9||-13.4||-4.4||1.8||-1.1|
|McLean Budden Intl Equ D||MF||42.7||1.25||14.0||-6.0||-4.4||1.3||-1.2|
|BMO International Index||MF||63.3||1.07||14.0||-16.6||-8.6||2.2||-1.3|
|Astra International Equity||Seg||61.9||3.29||10.9||-3.7||-3.3||1.5||-1.4|
|Worst International Equity Funds over 10 Years|
|Canada Life Intl Eq (CI) Gens||Seg||6.1||3.58||10.8||-25.8||-12.7||-6.7||-7.9|
|Assump./MB Quant EAFE Eq.-A||Seg||0.6||1.94||-14.1||-24.5||-13.0||-6.2||-6.8|
|CI International Segregated I||Seg||4.1||2.77||11.2||-25.2||-12.6||-5.2||-6.1|
|TD International Equity||MF||685.3||2.42||12.4||-21.7||-13.3||-5.4||-6.0|
|Clarica SF CI International Value||Seg||21.9||2.90||8.1||-5.2||-6.6||-0.7||-4.9|
|Copernican Intl Div Income||MF||46.7||2.63||22.0||-12.6||-6.0||-2.0||-4.9|
|GWL Int Opp(JPM) NL||Seg||3.4||3.23||11.9||-13.5||-6.8||-0.5||-4.3|
|CDA International Equity (CC&L)||Seg||1.8||1.30||5.1||-18.2||-8.3||-2.8||-4.3|
|Manulife Ser R A Int'l Equity||Seg||8.2||3.20||17.6||-17.7||-11.5||-3.9||-4.1|
|RBC International Equity||MF||145.9||2.16||6.3||-19.1||-9.6||-2.2||-3.9|
|Canada Life Ind Int Eq (TD) Gens||Seg||5.3||2.91||10.1||-13.9||-7.6||-0.7||-3.4|
|StandardLife Ideal Int'l Equity||Seg||25.2||2.79||12.1||-11.6||-5.2||1.2||-3.4|
|IA Ultraflex R-M Inter Equity||Seg||3.1||4.20||11.7||-14.6||-8.1||-1.7||-3.1|
|DFS GIF Intl Eq AllianceBernstein||Seg||3.8||3.50||12.7||-18.9||-10.6||-1.4||-3.0|
|MSCI EAFE ($ Cdn)||-11.7||-4.6||2.5||-0.5|
|S&P 500 Composite ($ Cdn)||-17.9||-8.2||-5.1||-5.5|
|S&P/TSX Total Return||30.0||-18.2||-0.6||8.0||6.7|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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