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Twelve funds to ponder for your RRSP and TFSA

We sifted through more than 11,000 mutual funds and ETFs to come up with a dozen worthy options

It's RRSP season, and that means the annual mutual fund treasure hunt is under way for investors.

There are roughly 11,300 total funds and fund variations to sift through this year, so you'd better get busy. Or, get yourself some help.

That's where we come in, with our list of 12 good mutual funds and exchange-traded funds for registered retirement savings plans and tax-free savings accounts. We'll walk through the list here, but you can find a fuller package of information about each fund online at

It's an ideal place to begin your own fund research.

Some key points about the list of 12 good funds:

Mutual funds were considered only if they have a track record of at least 10 years. ETFs, which have generally been around less time, were required to have a history of at least five years.

Funds must rank in the first or second quartile for the past three- and 10-year periods (quartiles rank funds in a category into four groups - first quartile represents the top performers over a given time period, and fourth is worst). For ETFs, three- and five-year quartiles were considered.

The emphasis is on core funds, or those that could account for the major part of a portfolio.

Final cuts were made by favouring funds that have impressed me during my years as personal finance columnist for The Globe and Mail.

Here's the list, in alphabetical order: 1 Beutel Goodman Canadian Equity This is so predictable - the stock markets

took off last year and this fund couldn't keep up with the fast crowd. Oh well. This is your kind of fund only if you keep your eye on long-term performance and don't get fussed about what's happening at the moment. Long-term results are above average, with much less volatility than the broader stock market.

2 CI Harbour

This fund's results are good enough to have prompted me to pick

its chief stock picker, Gerry Coleman, as money manager of the decade (check it out: Risk-adjusted returns are the story with this fund. It manages down markets comparatively well, and it gets its fair share of rising markets. The long view is 10 years of returns that demolish the S&P/TSX composite index.

3 CI Signature

High Income

Balanced funds are a hot commodity with

investors right now, and this is quite a good one. It regularly beats its peers in the global neutral balanced category, and with far less volatility. The portfolio was about 42-per-cent tilted to bonds at the end of last year, suggesting a cautious stance. At 1.52 per cent, the management expense ratio way undercuts the peer average of 2.38 per cent.

4 Dynamic Value Fund of Canada

A superior performer that, unusually, got only mildly hammered in 2008. Its loss of 28.2 per cent compares with a drop of 30.7 per cent for the average Canadian focused equity fund, and 33 per cent for its benchmark stock index. There's a heavy 55-per-cent concentration in energy and mining stocks here, so don't get complacent about risk.

5 iShares CDN Bond Index Fund (XBB)

This ETF - think of an index-tracking mutual

fund that trades like a stock - gives you exposure to the entire Canadian bond market (government plus corporate) concentrated in one little pill. Toss it into your portfolio and you've got your bond coverage taken care of. The MER is 0.30 per cent, compared with an average of 1.68 for Canadian bond funds.

6 iShares CDN LargeCap 60 Index Fund (XIU)

The 60 most dominant stocks listed on the TSX packaged into something that costs you just 0.17 per cent a year to own. A true bargain, and a formidable competitor to all Canadian equity funds. The definitive ETF here in Canada.

7 iShares CDN Short Bond Index Fund (XSB)

Just the thing for investors

who recognize the need to maintain holdings in bonds in all market conditions, but want to play it safe when interest rates rise. The short-term bonds in this ETF will hold up better against higher rates than a conventional bond fund, including XBB.

8 Mackenzie Ivy Foreign Equity

A fund you look at if you buy into the

concept of sacrificing returns in good markets for strong protection in down markets. Loss in 2008 for this fund: 6.7 per cent; loss for the average global equity fund: 30.1 per cent. Predictably, it got skunked in 2009.

9 Mawer Canadian Balanced RSP

A "fund of funds" product, which means

it's primarily assembled from equity and bond funds in the low-profile but excellent Mawer Investment Management family. The MER is dirt cheap for a fund of this type at 1.03 per cent, and the results are consistently good. Just a thought, but this could be your entire RRSP in a single fund.

10 Mawer World Investment

They say Canadian investors should invest globally because it's not smart to concentrate on only 3 per cent of the global market. What they don't tell you is that foreign equity funds are a boneyard for Canadian money managers. This international equity fund (everywhere but North America) is a notable exception.

11 PH&N Bond-D

Low fees plus smart management come together

in this consistent top-tier performer. Lots of corporate bonds here, which help punch up returns and take the edge off the pain when interest rates rise. Make sure you ask for the supercheap D version of this fund, which costs a minimum of $5,000.

12 Any Big Bank Dividend Fund

BMO Dividend, CIBC Dividend Growth, RBC Canadian Dividend, Scotia Canadian Dividend and TD Dividend Growth - all do a good to excellent job of exposing you to the smart investor's portfolio bedrock of blue-chip stocks paying dividends.


12 good mutual funds and ETFs for your RRSP or TFSA

Minimum 2009 3-Year 10-Year
Mutual Funds Category MER (%) Investment Quartile Quartile Quartile
Beutel Goodman Cdn EquityCdn Equity1.43$10,000 411
CI HarbourCdn Focused Equity2.31$500 211
CI Signature High IncomeGlobal Neutral Bal.1.52$500 111
Dynamic Value Fund of CanadaCdn Focused Equity2.41$500 111
Mackenzie Ivy Foreign EquityGlobal Equity2.43$500 411
Mawer Canadian Balanced RSPGlobal Neutral Bal.1.03$5,000 211
Mawer World InvestmentInternational Equity1.47$5,000 111
PH&N Bond - DCdn Fixed Income0.59$5,000 111
Any big bank dividend fundVarious1.66-1.96$100-$500
Ticker 2009 3-Year 5-Year
ETFs Category MER (%) Symbol Quartile Quartile Quartile
iShares CDN Bond Index FundCdn Fixed Income0.3XBB-T311
iShares CDN LargeCap 60 Canadian Equity0.17XIU-T211
iShares CDN Short Bond Cdn S-T Fixed Income0.25XSB-T211

© 2007 The Globe and Mail. All rights reserved.

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