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Mutual Fund News

No capital gains here - they're all losers

swon@globeandmail.com

What are we looking for?

Money losers over 15 years.

Keep in mind these funds are survivors. Some funds were merged or terminated during this time. After all, how can you market a fund with no returns over the longer term?

The search

We looked at all funds in the red for 15 years ended May 31. U.S. dollar, segregated, and duplicate versions of the funds were excluded.

What did we find?

Mostly foreign stock funds except for Mavrix Canadian Growth [formerly Mavrix Growth] and two labour sponsored investment [also called retail venture capital] funds.

Mavrix Canadian Growth has posted an average annual loss of 9.6 per cent. "It has a terrible record," acknowledged manager Roger Dent of Mavrix Fund Management Inc. He took over recently after the departure of Malvin Spooner who ran it from 1996 to 2005, and over the past year.

The performance likely suffered from the bursting of the technology bubble in 2000, and "illiquid holdings that performed badly" in the market downturn, said Mr. Dent, who also ran the fund before 2009. "The good thing is that it has a big tax-loss carry forward position. Anyone buying it doesn't have to worry about capital gains allocations."

VenGrowth Investment Fund Inc. and GrowthWorks Canadian, which respectively lost 3.4 per cent and 3.2 per cent annually, are labour funds that have run into tough times. The VenGrowth fund, which suspended redemptions in 2008, is giving money back to unitholders through an annual payout as it sells its investments.

Foreign stock funds make up most of the balance with some of the losses attributable to currency conversion to a strengthening Canadian dollar. Dom Grestoni, who heads up Investors Group Inc.'s North American equity group, suggested that currency is likely the biggest reason for average 3.1-per-cent loss by Investors U.S. Large Cap Growth.

This fund, which began as Investors Special Fund focused on all-cap North American stocks, changed its mandate in June, 2000, to invest in U.S. large-cap growth stocks. Under its new strategy, the fund lost an average of 9 per cent a year until May 31 versus a 4-per-cent loss for the S&P 500 in Canadian dollars.

The fund probably took on more of a "tech orientation, and that may have contributed to the below benchmark returns for the [past] 10 years," said Mr. Grestoni, who is interim manager. Later this month, Richard Wong will succeed Keith McLean who has run the fund since mid-2009. He and Daniel McClure, who has co-run the fund since 2003, resigned recently to join GMP Investment Management.

Four Japanese equity funds posted average annual losses ranging from 3.5 per cent to 7.3 per cent. The losses are not too surprising given that the Japanese market has gone nowhere for a couple of decades.

***

Money losers for 15 years ending May 31, 2010
(As of May 31)Latest% rtn (May 31)Calendar Year % Returns
NameCategoryAssets ($-mil)MER15-yrYTD20092008200720062005
Mavrix Canadian GrowthCdn Sm/Md Cp Eq1.63.45-9.6-2.515.7-68.11.335.68.4
Investors Japanese Equity-CJapanese Equity8.32.87-7.3-2.3-11.9-21.4-21.41.016.9
BMO JapaneseJapanese Equity9.52.47-5.50.1-9.9-15.6-25.31.619.7
TD Japanese GrowthJapanese Equity22.02.68-3.6-2.5-9.9-10.2-24.9-2.230.8
AGF Japan ClassJapanese Equity21.13.13-3.5-0.7-13.2-21.0-23.02.417.0
VenGrowth Invst Fund Inc. Cl A SrERetail Venture Cap.30.44.17-3.428.6-32.1-37.0-9.66.1-3.9
GrowthWorks CanadianRetail Venture Cap.85.65.50-3.2-4.6-11.9-6.2-0.22.96.0
Investors U.S. Large Cap Growth-CU.S. Equity13.42.87-3.1-8.027.0-32.9-2.26.40.8
CI PacificAsia Pacific Equity64.22.33-2.6-5.40.4-24.24.216.920.7
Sceptre Global Equity-AGlobal Equity4.22.61-2.3-6.711.2-34.4-7.213.28.4
AGF Asian Growth ClassAsia Pac. ex-Jpn Eq47.73.11-2.1-6.643.0-39.518.131.76.2
Fidelity Japan-AJapanese Equity5.52.77-1.9-1.0-1.4-24.1-21.4-0.822.9
TD International EquityInt'l Equity488.92.42-1.6-14.810.7-40.0-14.422.34.4
Renaissance AsianAsia Pacific Equity6.93.21-1.4-11.342.1-43.315.07.821.0
Scotia U.S. GrowthU.S. Equity28.52.59-1.1-4.1-3.7-27.1-7.98.50.0
CIBC Asia PacificAsia Pacific Equity108.92.89-1.1-7.118.8-26.33.24.320.2
Mackenzie Cundill Global Div-T5Globl Sm/Md Cp Eq63.02.45-1.0-3.222.8-39.5-13.820.36.2
Investors Pacific International-CAsia Pac. ex-Jpn Eq33.92.87-1.0-7.038.1-42.818.932.511.8
TD Pacific Rim-IAsia Pacific Equity29.82.47-0.9-5.57.7-32.33.314.015.5
Renaissance US Equity GrowthU.S. Equity6.92.63-0.6-1.810.1-37.8-9.52.32.0
Altamira Japanese OpportunityJapanese Equity6.52.40-0.5-2.9-10.1-12.4-17.55.713.1
Scotia Global GrowthGlobal Equity73.42.57-0.2-6.222.8-32.5-8.812.26.1
RBC International EquityInt'l Equity131.22.16-0.2-11.88.3-34.1-3.213.911.3
Altamira Asia PacificAsia Pacific Equity38.02.40-0.2-9.09.8-20.6-7.113.714.1
HSBC Emerging Markets-IEmerging Mkts Eq16.32.78-0.2-11.343.8-48.818.527.326.2
Desjardins Global Equity ValueGlobal Equity198.32.48-0.1-8.69.4-38.8-15.325.15.8
AIC ValueU.S. Equity70.12.620.0-3.712.4-42.0-28.622.6-2.0
S&P/TSX Total Return8.91.235.1-33.09.817.324.1
BMO Nesbitt Burns Cdn Small Cap Index9.04.475.1-46.62.016.619.7
NIKKEI 225 Total Return Index ($ Cdn)-5.2-5.2-1.6-10.8-19.65.518.7
MSCI World ($ Cdn)3.5-6.411.8-26.1-7.120.66.6
NASDAQ Composite ($ Cdn)4.7-0.623.0-26.3-6.99.5-1.8
S&P 500 Composite ($ Cdn)3.0-2.35.5-23.8-12.213.6-0.2
Source: Globe Investor

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