What are we looking for?
How the biggest Canadian stock funds have fared over the longer haul.
We screened the 15 largest funds by assets in three categories: Canadian equity, Canadian focused equity (which can invest up to 50 per cent in foreign stocks) and Canadian dividend and income equity. We ranked them by five-year returns, and then compared them over 10 years. U.S. dollar, segregated, pooled and duplicate versions of the funds were excluded.
What did we find?
The iShares CDN Large Cap 60 exchange-traded fund was the leader over five years with an annualized return of 6.3 per cent.
But this same exchange-traded fund, which invests in the 60 largest stocks in the S&P/TSX composite index, lagged all the other funds with an annualized return of 2.9 per cent over 10 years.
So what gives?
With about 45 per cent currently invested in energy and materials stocks, the exchange-traded fund has certainly benefited from the boom in commodity stocks in recent years.
The iShares ETF, which has a management expense ratio of 0.17 per cent, would also be expected to outperform "because our fees are lower than most mutual funds," said Oliver McMahon, director of product management for iShares Canada.
Over a decade, the ETF's trailing performance might be due to the fact that smaller-cap companies have done better than larger companies, while "over the last five years, large-cap stocks have outperformed small-cap stocks," Mr. McMahon said.
"We would only ever hold Canadian stocks," he said. "If a manager gets lucky with a foreign stock or a [smaller cap] Canadian stock, then that is going to add value."
|Five- and 10-year returns for giant Canadian stock funds ended June 30|
|As ofJune, 2010||Latest (June 30)|
|Fund||Category||Assets ($mil)||MER||5-yr (%)||10-yr (%)||2009 (%)||2008 (%)||2007 (%)||2006 (%)||2005 (%)|
|iShares CDN Large Cap 60 Index||Cdn. Equity||11056.5||0.17||6.3||2.9||31.5||-31.1||10.9||21.5||25.9|
|CI Signature Select Cdn.||Cdn. Focused Equity||3082.8||2.31||5.0||8.0||28.0||-26.0||3.0||21.0||22.9|
|TD Cdn. Equity||Cdn. Focused Equity||2894.0||2.07||5.0||4.8||47.2||-42.2||10.5||23.1||26.2|
|CI Harbour||Cdn. Focused Equity||5639.4||2.31||4.6||7.1||26.9||-24.5||6.2||15.2||23.5|
|Fidelity True North-B||Cdn. Equity||1700.7||2.20||4.6||4.8||30.6||-34.4||12.8||17.6||23.6|
|RBC Cdn. Dividend||Cdn. Dividend and Incm Equity||10431.2||1.70||4.3||8.3||27.3||-27.0||3.0||15.1||21.1|
|TD Dividend Growth||Cdn. Dividend and Incm Equity||4050.6||1.92||4.1||8.3||32.8||-29.9||1.3||15.9||23.8|
|RBC Cdn. Equity||Cdn. Equity||4485.6||1.96||4.0||4.2||30.1||-33.8||9.4||17.5||23.0|
|Scotia Cdn. Dividend||Cdn. Dividend and Incm Equity||2359.9||1.65||3.1||7.2||26.0||-27.7||6.5||12.8||19.4|
|AGF Cdn. Large Cap Div-Classic||Cdn. Focused Equity||2341.3||1.76||3.0||4.5||26.0||-31.4||7.1||17.1||20.8|
|CI Cdn. Investment||Cdn. Focused Equity||3641.4||2.26||2.8||7.3||27.6||-27.4||1.4||14.2||22.0|
|BMO Dividend||Cdn. Dividend and Incm Equity||3839.9||1.70||2.1||7.5||19.8||-26.3||1.8||12.9||20.9|
|MD Equity||Cdn. Focused Equity||1724.5||1.45||1.5||4.5||25.5||-28.8||0.7||16.5||18.3|
|PH&N Dividend Income-D||Cdn. Dividend and Incm Equity||1885.1||1.11||0.7||6.6||33.0||-32.5||-3.9||16.5||13.6|
|Invesco Select Cdn. Equity||Cdn. Focused Equity||1777.1||2.38||0.2||4.3||17.7||-25.5||-1.0||13.5||10.4|
|S&P/TSX total return||5.5||3.3||35.1||-33.0||9.8||17.3||24.1|
|S&P 500 composite ($Cdn.)||-5.6||-6.5||5.5||-23.8||-12.2||13.6||-0.2|
© 2007 The Globe and Mail. All rights reserved.
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