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Mutual Fund News

A rare expertise with bond funds

rcarrick@globeandmail.com

What we're looking at

This week's Cruncher series focuses on the largest fund families in Canada. How good are their most popular funds? Here, we look at TD Asset Management, the fund arm of Toronto-Dominion Bank.

Our screen

The 25 largest TD funds are listed here along with quartile rankings over a variety of time frames. Quartiles are the best way to measure a fund's performance. They divide funds in a category into four groups according to their returns, with first quartile being most desirable and fourth the basement. Fees are another important factor in evaluating funds. Here, we've included management expense ratios for each fund, plus the category average. Note: Big funds should be much lower than average because of economies of scale.

What we found

As was the case with CI Investments in Thursday's Cruncher, TD has consistently delivered top results in its most popular funds. The difference between the two companies is that TD's expertise extends to bond funds as well as equity funds, while CI's forte is more on the equity side.

Few mutual fund companies do bond funds well, but TD Canadian Bond, Short-Term Bond, Real Return Bond and Mortgage all have top quartile rankings over the long term. Oddly, TD Canadian Bond and Short Term Bond have fees that are well below average, while the mortgage and real return bond funds are on the high side of average. The dud in the bunch is TD High Yield Income, a high-yield bond fund with average costs and below-average returns over several time frames. The fund had a stellar 2009, though.

An interesting contrast in equity funds can be seen in TD Canadian Equity and TD Canadian Blue Chip Equity. The former has shown more aggressiveness than you'd expect in a bank fund, and it paid a price in 2008 with a glaring loss of 42 per cent. Still, the quartile rankings for this fund are impressive.

And then there's the blue chip equity fund, which sounds more like a bank's speed. It's been an uneven performer, and it costs more to own than TD Canadian Equity.

***

Top 25 TD Funds by Assets
(May 31,2010)LatestCat. Avg(Quartile May 31, 2010)
NameCategoryAssets ($Mil)MERMER1-yr3-yr5-yr10-yr
TD Canadian BondCanadian Fixed Income9,031.01.051.741111
TD Monthly IncomeCanadian Equity Balanced4,391.21.402.661111
TD Dividend GrowthCanadian Dividend and Income Equity4,153.61.922.361211
TD Income Advantage Portfolio-ICanadian Fixed Income Balanced4,069.31.562.21111
TD Premium Money MarketCanadian Money Market3,744.20.320.891111
TD Dividend Income-ICanadian Equity Balanced3,660.51.922.661321
TD Canadian Money MarketCanadian Money Market3,527.40.610.892222
TD Mgd Bal Growth Portfolio-IGlobal Neutral Balanced3,068.72.412.482433
TD Canadian EquityCanadian Focused Equity3,033.52.072.781111
TD Short-Term BondCanadian Short Term Fixed Income2,820.61.051.521111
TD Mgd Aggress Growth Port-IGlobal Equity Balanced2,115.12.522.682333
TD Mgd Inc&Mod Growth Portfolio-IGlobal Neutral Balanced2,069.92.272.483232
TD Mgd Income Portfolio-ICanadian Fixed Income Balanced1,830.72.072.211433
TD MortgageCanadian Short Term Fixed Income1,511.41.731.524112
TD Real Return BondCdn Inflation Protected Fixed Income1,487.01.421.07211
TD Canadian Core Plus Bond-ICanadian Fixed Income1,256.01.421.741
TD High Yield IncomeHigh Yield Fixed Income1,249.91.891.901433
TD Canadian Blue Chip EquityCanadian Focused Equity1,225.12.232.784232
TD Balanced GrowthCanadian Equity Balanced1,154.02.112.664333
TD Canadian IndexCanadian Equity836.40.842.522113
TD Comfort Balanced Portfolio-IGlobal Neutral Balanced796.71.902.482
TD Canadian ValueCanadian Equity641.22.072.521332
TD U.S. Large-Cap ValueU.S. Equity623.52.422.61133
TD U.S. Blue Chip EquityU.S. Equity593.12.422.612123
TD Global Dividend-IGlobal Equity581.12.422.7633
Source: Victor Tan, Globeinvestor.com

© 2007 The Globe and Mail. All rights reserved.

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