What We're Looking At
It's Day Two of our week-long look at how the mutual funds that were massacred last year have done in 2009. Today, balanced funds.
Funds in all of the Canadian balanced categories (neutral, equity bias and fixed-income bias) with assets of $25-million or more were ranked according to the size of their losses in 2008. To see how each fund has rebounded, we have displayed the return for the year through Nov. 26. For a longer-term view on the performance of these funds, we have included five-year quartile numbers. Quartiles divide funds in a category into four groups: first quartile is best, fourth is worst.
What We Found
People buy balanced funds as a sort of stock market lite product - you know, performs great, less risky. But you have to understand that there are differences between balanced funds. As today's screen shows, equity balanced funds (with an emphasis on stocks over bonds) took the worst hits in 2008. Neutral balanced funds (stocks and bonds in roughly equal proportions) are scarce on the list, while fixed-income balanced funds (emphasis on bonds) are even rarer.
It pays to know what's in your balanced funds both in terms of downside risk and upside potential.
Take Investors Canadian Balanced as an example. If you pop the hood on this Canadian equity balanced fund, you'll find that it had just about 69 per cent of its assets invested in stocks (according to its most-recent report to Globefund.com), 20 per cent in bonds and the rest mostly in cash. The fund fell hard in 2008, but its heavy stock weighting has delivered big time this year. Bottom line, this is a pretty aggressive balanced fund.
Dynamic Power Balanced provides another example of how you need to scrutinize the holdings of a balanced fund. This Canadian neutral balanced fund (suggesting stocks and bonds would be more or less equal) actually had almost 58 per cent of its assets in stocks as of its most recent reporting date, 40 per cent in bonds and the rest in cash. Again, this is a fairly aggressive mix that has played itself out through zigzag returns this year and last.
Balanced funds are hugely popular with investors, but they differ widely in approach. Make sure you get the kind of balance that suits your needs.
|Balanced Funds as of Nov. 26, 2009|
|Assets ($-mil)||Latest||% rtn||% rtn||Quartile|
|Fund name (as of Oct. 31)||MER||2008||Nov. 26||Oct. 31||Category|
|ROI Canadian Retirement Series A||44.0||-33.4||21.4||Canadian Equity Balanced|
|Acuity Social Values Balanced||59.5||2.94||-31.6||30.2||2||Canadian Equity Balanced|
|Manulife Core Balanced Fund||96.3||2.45||-29.7||11.4||Canadian Equity Balanced|
|Brandes Sionna Diversified Income||24.8||2.15||-29.4||23.4||Canadian Equity Balanced|
|Acuity Canadian Balanced||97.4||2.93||-28.8||31.4||2||Canadian Equity Balanced|
|TD Dividend Income-I||3,151.5||1.92||-28.8||27.6||2||Canadian Equity Balanced|
|Dynamic Diversified Real Asset||27.8||2.53||-27.8||36.7||Canadian Equity Balanced|
|Investors Canadian Balanced-C||1,538.6||2.85||-27.7||42.9||1||Canadian Equity Balanced|
|Dynamic Power Balanced||1,442.2||2.11||-26.9||33.6||1||Canadian Neutral Balanced|
|Axiom Canadian Growth Portfolio||54.2||2.42||-26.2||21.6||Canadian Equity Balanced|
|imaxx Canadian Fixed Pay||175.1||2.61||-25.9||29.3||3||Canadian Equity Balanced|
|TD Diversified Monthly Income-I||547.4||2.18||-25.6||24.9||3||Canadian Equity Balanced|
|Axiom Long-Term Growth Portfolio||223.8||2.45||-25.5||19.1||Canadian Equity Balanced|
|Desjardins Dividend Income||648.7||2.05||-25.1||21.3||2||Canadian Equity Balanced|
|Desjardins Alternative Investments||752.1||2.49||-24.1||17.4||4||Canadian Equity Balanced|
|Mackenzie Saxon Balanced-SI||261.9||1.99||-23.6||25.9||2||Canadian Equity Balanced|
|TD Monthly Income||3,973.4||1.40||-23.4||27.7||1||Canadian Equity Balanced|
|BMO GDN Can Divers Mthly In-M||363.7||2.30||-22.7||22.0||3||Canadian Equity Balanced|
|Investors Dividend-C||11,896.3||2.85||-22.5||20.4||3||Canadian Equity Balanced|
|National Bank Monthly Income||222.0||1.67||-22.4||26.4||2||Canadian Equity Balanced|
|Altamira Tactical Asset Allocation||79.2||1.55||-21.8||20.4||1||Canadian Equity Balanced|
|Fidelity Monthly High Income-A||68.2||2.25||-21.7||32.9||Canadian Equity Balanced|
|Manulife Simplicity Balanced Port||923.4||2.55||-21.5||20.0||4||Canadian Neutral Balanced|
|IA Clarington Canadian Balanced||165.7||2.69||-21.5||19.8||3||Canadian Equity Balanced|
|Investors Mutual of Canada-C||2,249.2||2.85||-21.3||18.5||3||Canadian Equity Balanced|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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