WHAT ARE WE LOOKING FOR?
Index beaters among Canadian stock mutual funds over the past decade.
Let's see who has been able to outwit the S&P/TSX total return index over a 10-year time frame that included two bear markets.
We screened Canadian equity, Canadian focused equity, and Canadian dividend and income funds for 10 years ending Feb. 28. Segregated, pooled, U.S. dollar, and duplicate versions of funds were excluded. We also left out those requiring a minimum investment of $10,000.
WHAT DID WE FIND?
Slightly more than half of the 121 funds screened beat the index. However, the table only features the best 30 performers.
Renaissance Millennium High Income rose to the top with an average annual return of 10.8 per cent. That's impressive given that the fund has a management expense ratio (MER) of 2.38 per cent, which eats away at returns.
This fund has invested in income trusts and dividend-paying stocks from the get-go in 1997. "We thought interest rates were going to stay at very low levels over the next 10 to 15 years," said Barry Morrison, manager since inception.
He had expected a deflationary trend, saying that rising competition from globalization would force companies to do everything to cut costs. In this environment, companies able to grow and increase payout rates would provide more attractive returns than bonds, he said.
Royal Bank of Canada, Toronto-Dominion Bank, Enbridge Inc. and Northland Power Income Fund are securities that have been in the fund since the start.
Among non-dividend funds, CI Signature Select Canadian, which can invest up to 50 per cent in foreign stocks, posted an average annual return of 9.8 per cent. "We have been first or second quartile every year for a decade," said manager Eric Bushell.
The performance was helped by "dodging bubbles" in a decade fraught with them in areas ranging from Asian equities to income trusts and the technology, property, and energy sectors, he said. "Hedging U.S. dollar exposure for the past seven years [also] helped."
Mackenzie Saxon Stock Fund garnered an average annual return of 9.7 per cent. Suzann Pennington, who had co-managed it since 2005, took over as lead manager of the value-oriented fund last fall from Rick Howson. "We stay fully invested at all times," she said. "And we keep exposure to economically sensitive and economically defensive names at all times."
The fund also gained 57 per cent over one year, helped by names such as Methanex Corp., Sherritt International Corp., Alimentation Couche Tard Inc. and bank stocks.
|Index beaters among 30 best performing Canadian large-cap funds over 10 years|
|(As of Feb. 28)||Latest||% returns (as of Feb. 28, 2010)|
|Fund name||Asset Class (Assets ($-mil)||MER||10-yr||5-yr||3-yr||1-yr|
|Renaissance Millennium High Income||Cdn. Dividend and Income Equity||515.30||2.38||10.8||1.5||-4.2||32.1|
|TD Dividend Growth||Cdn. Dividend and Income Equity||3,834.93||1.92||10.4||5.5||-1.8||47.3|
|RBC Canadian Dividend||Cdn. Dividend and Income Equity||10,307.63||1.70||9.8||5.4||-1.3||41.5|
|CI Signature Select Canadian||Cdn. Focused Equity||3,199.63||2.31||9.8||5.8||-1.8||37.7|
|Mackenzie Saxon Stock Fund-SI||Cdn. Equity||289.24||2.00||9.7||3.7||-2.4||56.9|
|Mawer Canadian Equity||Cdn. Equity||110.68||1.20||9.6||5.9||-0.5||43.0|
|PH&N Dividend Income-D||Cdn. Dividend and Income Equity||2,034.93||1.11||9.4||2.4||-4.4||50.6|
|Beutel Goodman Canadian Equity||Cdn. Equity||1,139.71||1.43||9.4||5.6||-0.3||44.2|
|Dynamic Value Fund of Canada||Cdn. Focused Equity||1,546.06||2.41||9.1||8.9||1.0||49.7|
|BMO Dividend||Cdn. Dividend and Income Equity||4,010.83||1.70||9.1||3.3||-4.2||32.4|
|Scotia Canadian Dividend||Cdn. Dividend and Income Equity||2,342.12||1.66||9.0||4.4||-1.8||39.6|
|CI Harbour||Cdn. Focused Equity||5,833.82||2.31||8.9||5.6||-0.3||36.3|
|Investors Cdn Large Cap Value-C||Cdn. Focused Equity||2,704.30||2.85||8.9||6.9||0.1||73.3|
|CI Canadian Investment||Cdn. Focused Equity||3,945.39||2.26||8.9||4.2||-2.2||42.4|
|Dynamic Dividend||Cdn. Dividend and Income Equity||467.87||1.58||8.7||2.9||-2.7||28.8|
|IA Clarington Cdn Conservative Eqty||Cdn. Equity||271.93||2.47||8.5||4.4||0.5||31.4|
|IA Clarington Dividend Inc-T4||Cdn. Dividend and Income Equity||290.50||1.89||8.5||1.2||-5.2||35.3|
|Dynamic Canadian Dividend Fund||Cdn. Focused Equity||903.73||2.35||8.1||1.5||-5.3||35.7|
|RBC O'Shaughnessy Canadian Equity||Cdn. Focused Equity||1,172.22||1.47||8.1||1.5||-5.1||48.0|
|Standard Life Cdn Dividend Growth-A||Cdn. Dividend and Income Equity||1,508.72||2.01||8.0||1.9||-6.1||35.9|
|Beutel Goodman Canadian Intrinsic||Cdn. Focused Equity||2.44||1.43||7.7||4.0||-2.8||28.4|
|CIBC Dividend Growth||Cdn. Dividend and Income Equity||901.16||1.96||7.7||4.5||-1.4||39.0|
|Educators Dividend||Cdn. Dividend and Income Equity||1.60||7.6||4.0||-3.7|
|RBC North American Value||Cdn. Focused Equity||192.46||2.00||7.4||7.2||1.1||38.2|
|Desjardins Environment||Cdn. Equity||161.91||2.35||7.1||10.1||2.6||51.9|
|CI Signature Dividend||Cdn. Dividend and Income Equity||1,464.14||1.79||7.1||3.3||-0.9||41.2|
|FÉRIQUE Equity||Cdn. Equity||464.76||0.80||7.1||6.7||0.2||48.0|
|Dynamic Dividend Value||Cdn. Focused Equity||392.38||1.58||7.0||1.7||-4.4||37.6|
|Mackenzie Cundill Cdn Security 'C'||Cdn. Focused Equity||1,440.92||2.38||6.8||1.2||-3.4||48.6|
|Bissett Canadian Equity-F||Cdn. Equity||238.30||1.37||6.7||4.4||-1.9||61.4|
|S&P/TSX Composite Index||2.5||3.8||-3.8||43.2|
|S&P/TSX Total Return||4.7||6.5||-0.9||47.6|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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