WHAT WE'RE LOOKING AT
High-cost mutual funds: How have they performed in the past several years?
Widely available funds in all categories with assets of more than $50-million were ranked from highest management expense ratio on down, along with their quartile rankings for the one-, three- and five-year periods to March 31. Quartiles divide funds in a category into four groups, with the first quartile representing top performers and the fourth quartile indicating worst-in-class results.
WHAT WE FOUND
Costs are among the most important factors in choosing a mutual fund. Managers have good years and bad, and even the best of them tend to move on after a period with a firm. Low costs are the one thing you can count on from one year to the next. That said, it's clear from our screen that high fees do not automatically condemn you to terrible returns.
Take a look at AGF Emerging Markets - it's one of the most widely held funds in this screen, with assets of close to $1-billion, and its management expense ratio is a rotund 2.98 per cent. It's hard to complain about the returns, though. They're first or second quartile across the board.
Still, there's a high incidence of disappointing returns from these high-fee funds. Over the past five years, 12 of the top 24 funds on our list have five-year returns that rank in the third or fourth quartile. High fees have weighed even more heavily in the past 12 months, a period in which 16 of the 24 highest-cost funds ranked in the bottom two quartiles.
High fees are common in specialty areas like emerging markets and China equity, where returns can be high enough to make investors indifferent to the cost of owning a fund. Ignoring fees is a mistake, though. For every Renaissance China Plus (high cost, but first quartile for the past one-, three- and five-year periods), there's a Renaissance Global Health Care (high cost and third and fourth quartile all the way).
|High-Fee Funds with Assets greater than $50 Million|
|Fund Name||Category||Assets ($-mil)||MER||Quartile 1YR||Quartile 3YR||Quartile 5YR|
|Excel Chindia||Emerging Markets Equity||114.3||3.87||3||3||2|
|Mavrix Balanced Monthly Pay||Canadian Income Trust Equity||78.2||3.61||3||4||4|
|Excel China||Greater China Equity||99.4||3.32||2||4||4|
|Renaissance China Plus||Greater China Equity||190.4||3.19||1||1||1|
|Mavrix Dividend & Income||Canadian Focused Small/Mid Cap Equity||80.6||3.17||2||3||4|
|Renaissance Global Health Care||Health Care Equity||489.2||3.14||4||4||3|
|AGF Aggressive Global Stock||Global Equity||53.3||3.12||3||2||1|
|IG Beutel Goodman Cdn. Small-Cap-C||Canadian Small or Mid Cap Equity||259.1||3.12||3||1||1|
|Investors Mergers & Acquisitions-A||Miscellaneous||199.3||3.11||1||4||4|
|Excel India||Emerging Markets Equity||286.6||3.07||2||2||2|
|Stone & Co. Div Growth Cls Can A||Canadian Dividend and Income Equity||203.7||3.06||4||1||1|
|AGF Asian Growth Class||Asia Pacific ex-Japan Equity||52.6||3.04||3||3||2|
|AGF Global Resources Class||Natural Resources Equity||179.9||3.03||3||1||1|
|IG Mackenzie Univ Emerg Mkt Class-A||Emerging Markets Equity||244.7||3.03||3||2||2|
|AGF European Equity Class||European Equity||602.0||3.01||3||4||3|
|Distinction Balanced Portfolio||Canadian Neutral Balanced||145.7||3||2||4||4|
|AGF China Focus Class||Greater China Equity||279.3||2.99||4||2||4|
|AGF Emerging Markets||Emerging Markets Equity||911.6||2.98||2||1||1|
|IG Mackenzie Univ US Gw LeadersCl-A||U.S. Equity||169.4||2.98||4||1||2|
|Tmpltn Emerging Markets||Emerging Markets Equity||247.7||2.98||3||2||4|
|Manulife China Opportunities Class||Greater China Equity||75.4||2.97||3||3||3|
|AGF Canadian Resources||Natural Resources Equity||295.7||2.96||3||4||3|
|Acuity Canadian Equity||Canadian Focused Equity||66.7||2.95||1||3||3|
|IG AGF Global Equity-A||Global Equity||81.7||2.95||3||3||2|
|IG AGF U.S. Growth-A||U.S. Equity||167.5||2.95||4||2||1|
|IG Goldman Sachs U.S. Equity-A||U.S. Equity||232.7||2.95||4||4||4|
|Acuity Social Values Balanced||Canadian Equity Balanced||67.9||2.94||1||2||2|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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