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On balance, a decade of contrasts

What are we looking for?

The leaders and laggards over a decade among no-load Canadian balanced funds sold by the six big banks.

The search

We screened for the best and worst eight funds from the Canadian balanced, Canadian neutral balanced and Canadian fixed-income balanced categories for 10 years ended July 31. These categories vary from funds holding more than 60 per cent in equities versus bonds to less than 40 per cent in equities versus bonds. U.S. dollar, segregated, pooled, fund of funds and duplicate versions of these funds were left out.

What did we find?

Monthly income funds, which aim to provide regular monthly payout as well as some capital appreciation, rose to the top of the heap over the decade. The annualized gain by the eight best performing balanced funds also outpaced the S&P/TSX total return of 3.5 per cent. CIBC's Renaissance Canadian Monthly Income Fund emerged as the leader with an average annual 11.4-per-cent gain over 10 years. But this return is a bit misleading because it hasn't always been a balanced fund. It began as the Renaissance Canadian Income Trust Fund in 2002, but changed its name in 2006 after Ottawa changed the rules requiring income trusts to convert to corporations by 2011. The former equity fund's mandate was then expanded to include bonds and dividend-paying stocks. David Graham of CIBC Global Asset Management took over the fund last fall. Excluding the CIBC fund, the TD Monthly Income Fund has been the star over a decade with an average annual return of 9.1 per cent. CIBC Balanced was the worst performing laggard with an average annual gain of 1.4 per cent. Lower fees can help returns as indicated by the fact the long-term leaders among the balanced funds all have a management expense ratio (MER) of less than 2 per cent.

Top 8 Canadian Balanced Funds, 10-year, July 31
July 31 Calendar Year Returns (%)
Name Category As of July, 2010 Assets ($ mil) Latest MER 10-yr. (%) YTD (%) 2009 2008 2007 2006 2005
Renaissance Cdn. Monthly IncmCdn. Equity Balanced260.81.8211.42.617.0-
TD Monthly IncomeCdn. Equity Balanced4,477.91.409.14.230.7-
RBC Monthly IncomeCdn. Neutral Balanced7,
CIBC Monthly IncomeCdn. Neutral Balanced6,408.51.427.72.412.9-15.21.911.718.4
TD Dividend Income-ICdn. Equity Balanced3,790.21.927.63.530.8-
BMO GDN Mnthly Div. Fd ClassicCdn. Neutral Balanced27.61.567.24.426.1-
BMO Monthly IncomeCdn. Neutral Balanced4,831.01.496.03.216.2-
National Bank DividendCdn. Fxd Incm Balanced1,222.41.735.41.418.4-19.7-1.68.412.3
Bottom 8 Canadian Balanced Funds, 10-year, July 31
CIBC BalancedCdn. Neutral Balanced578.42.341.41.012.5-15.5-
Scotia Canadian BalancedCdn. Neutral Balanced2,381.71.961.81.514.3-
CIBC Balanced IndexCdn. Fxd Incm Balanced32.
TD Diversified Monthly Income-ICdn. Equity Balanced543.
RBC Balanced GrowthCdn. Neutral Balanced918.52.262.1-1.29.8-19.82.613.113.0
Altamira Tactical Asset AllocationCdn. Equity Balanced81.41.482.41.122.2-
TD Balanced GrowthCdn. Equity Balanced1145.32.112.5-1.616.4-20.11.512.111.2
RBC BalancedCdn. Neutral Balanced7,929.12.252.7-0.113.4-
S&P/TSX Total Return3.51.335.1-33.09.817.324.1

© 2007 The Globe and Mail. All rights reserved.

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