WHAT WE'RE LOOKING AT
Cheap-to-own balanced funds, which are the most popular category of mutual fund right now.
There are three variations of balanced funds - equity-focused, neutral and fixed income-focused. We considered all mainstream funds in these categories with management expense ratios (MERs) of less than 1.5 per cent, and then ranked them from the largest size on down. The average MER for Canadian balanced funds is about 2.4 per cent.
MERs are your best measure of how much it costs to own a fund. They gather almost all the expenses associated with running a fund and express them as a percentage of assets. Published fund returns have had fees deducted.
WHAT WE FOUND
Plenty of cheaply priced options for the many investors who like the idea of buying a fund that balances holdings in both stocks and bonds. The big banks dominate the list with a selection of monthly income funds that have done very well over the past five years.
Come to think of it, every fund on our list is in the first or second quartile over the past five years, and the same goes for all but a few names in the past three years. Who says low fees aren't your friend? Quartiles, by the way, are a way of dividing funds in a category into four groups according to their returns. First quartile is tops, fourth is the dregs.
Investors bought almost $21-billion worth of balanced funds in the past 12 months on a net basis (purchases minus sales), which makes them by far the favourite category of mutual fund. Some in the fund industry react to high demand with high fees. Don't be suckered. Fees are crucial with balanced funds because they have substantial bond holdings. Interest rates are still low these days by historical standards, which means you can't afford to have high fees eroding your returns.
Check your balanced fund MERs, and then look at the value you're getting in the form of returns. If there's an imbalance, today's Number Cruncher can help you find alternatives.
|Balanced Funds with MERs less than 1.5%|
|Fund name||Category||Assets ($-mil)||MER||Quart 1YR||Quart 3YR||Quart 5YR|
|RBC Monthly Income||Canadian Neutral Balanced||7,153.6||1.14||3||1||1|
|CIBC Monthly Income||Canadian Neutral Balanced||6,432.9||1.42||3||2||1|
|BMO Monthly Income||Canadian Neutral Balanced||4,980.5||1.49||2||1||1|
|TD Monthly Income||Canadian Equity Balanced||4,443.6||1.40||1||1||1|
|MD Dividend||Canadian Equity Balanced||1,349.3||1.44||2||2||1|
|Beutel Goodman Balanced||Canadian Equity Balanced||1,304.9||1.16||3||2||2|
|Scotia Diversified Monthly Income||Canadian Neutral Balanced||1,187.0||1.38||1||1|
|Quebec Professionals Balanced||Canadian Fixed Income Balanced||833.8||1.08||2||3||2|
|PH&N Balanced-D||Global Neutral Balanced||773.8||0.87||2||2||1|
|FÉRIQUE Balanced||Canadian Neutral Balanced||561.2||0.79||2||3||2|
|MD Balanced||Canadian Equity Balanced||468.9||1.45||1||2||1|
|FMOQ Omnibus||Canadian Neutral Balanced||445.7||0.95||2||2||2|
|PH&N Balanced Pension Trust-D||Canadian Neutral Balanced||403.5||0.56||1||3||2|
|McLean Budden Balanced Growth D||Global Neutral Balanced||225.2||0.95||3||2||1|
|HSBC Monthly Income-I||Canadian Fixed Income Balanced||224.4||1.46||1||2||2|
|Integra Balanced||Global Neutral Balanced||195.5||1.12||3||2||1|
|Mawer Cdn. Balanced RSP||Global Neutral Balanced||187.6||1.01||3||1||1|
|Compass Conservative Portfolio||Canadian Fixed Income Balanced||140.5||1.41||1||1||1|
|FMOQ Investment||Canadian Neutral Balanced||131.1||0.95||3||2||2|
|Standard Life Monthly Income-L||Canadian Neutral Balanced||95.2||1.17||2||1||1|
|Mawer Cdn. Diversified Investm't||Global Equity Balanced||87.9||1.02||3||1||1|
|Quebec Professionals Balanced Gwth||Global Neutral Balanced||79.5||1.11||3||3||2|
|FMOQ Monthly Income||Canadian Equity Balanced||65.7||0.95||2||1|
|Leith Wheeler Balanced||Global Equity Balanced||60.2||1.18||3||1||1|
|National Bank Monthly Conserv Inc||Canadian Fixed Income Balanced||52.1||1.40||1||1|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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