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Gone fishing ... for top performing bond funds

What we're looking at

An all-star team of Canadian bond funds, which have been a popular choice for investors during the recent financial market ups and downs.

Our screen

The goal here was to find names in the various major bond fund categories that have performed consistently well. Specifically, we've gone fishing for funds that ranked in the top quartile for the three- and 10-year periods to July 31. Quartiles divide funds in a category in four groupings - first quartile is the elite. Funds on this list are ranked by assets.

What we found

A nice mix of funds for all kinds of investors. Got a small portfolio? You can get into TD Canadian Bond with an upfront investment as small as $100. If you can muster $5,000, then PH&N Bond D (that's for do-it-yourself investors) is worth a look because of its low fee and strong returns. Beutel Goodman Income should be on your list of candidates if you have $10,000 to invest in a bond fund.

Common to all these funds are management expense ratios that rank miles below the astronomically high Canadian fixed income fund average of 1.72 per cent. The sole exception is Mandate National Mortgage Corp., which is a vehicle for investing in mortgages and thus riskier than a fund that holds bonds issued by governments, their agencies and major corporations.

If you're buying bond funds to provide stability and income for your portfolio, note that Canadian fixed income funds are designed as a sort of all-in-one product to cover off your bond needs. Short-term bond funds mainly stick to bonds maturing in five years or less, which means you get lower returns but also a somewhat higher margin of safety when interest rates rise.


Consistent Performers Among Bond Funds
As of July, 2010 As of July 31
Name Category Assets($mil.) LatestMER 1-yr (%) 3-yr (%) 5-yr (%) 10-yr (%)
TD Canadian BondCdn. Fixed Income9386.621.057.716.674.486.20
TD Short-Term BondCdn. Short Term Fixed Income2881.981.054.055.583.864.75
SEI Canadian Fixed Income-OCdn. Fixed Income1897.650.078.686.705.096.47
CIBC Cdn Short-Term Bond IndexCdn. Short Term Fixed Income1275.411.
Beutel Goodman IncomeCdn. Fixed Income1268.130.736.058.015.516.66
Dynamic Canadian Bond FundCdn. Fixed Income1155.861.575.956.564.155.65
PH&N Total Return Bond-DCdn. Fixed Income854.320.577.266.654.886.46
PH&N Bond-DCdn. Fixed Income813.090.587.557.065.056.45
United Cdn Fixed Income Pool-WCdn. Fixed Income565.770.189.196.654.976.36
PH&N Short Term Bond & Mtg-DCdn. Short Term Fixed Income278.610.584.625.814.305.16
RBC Advisor Canadian BondCdn. Fixed Income151.060.895.686.364.395.77
McLean Budden Fixed Income DCdn. Fixed Income144.130.656.296.584.476.01
Beutel Goodman Corp/Pro Active BondCdn. Fixed Income132.510.747.237.965.597.20
Integra BondCdn. Fixed Income115.
Harmony Cdn Fixed Income Pool-WCdn. Fixed Income72.810.167.507.075.266.20
Mandate National Mortgage CorpCdn. Short Term Fixed Income8.842.007.959.319.228.18
Ridgewood Canadian BondCdn. Fixed IncomeN/AN/A12.519.707.227.06

© 2007 The Globe and Mail. All rights reserved.

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