What are we looking for?
With Canadian stocks making up a mere 4 per cent of the world's stock market value, there is a strong argument for investing outside the country. Let's look at how global equity funds have done over the past three years, a period that includes the 2008 stock market crash.
We looked for the eight best and worst performers over three years ending Oct. 31. U.S. dollar, segregated, and duplicate versions of funds were excluded, as well as those requiring more than a $10,000-minimum.
What did we find?
Going global has benefited some investors, but it has been disastrous for others.
Manulife Global Opportunities Class managed by Chris Arbuthnot led the pack with a 7-per-cent average annual return over three years, while Hartford Global Leaders run by Bill Kanko averaged a 3.2-per-cent return. Both also made their gains without hedging their funds back to the Canadian dollar as the loonie rose.
Manulife Global Opportunities, which is 40-per-cent invested in U.S. stocks, has bounced back nicely from a 43-per-cent loss in 2008. The sharp drop stemmed from the fund snapping up bargain stocks perceived to have strong fundamentals as they plunged during the market meltdown. "We front-end loaded some pain, but benefited from that [as markets recovered]," said Mr. Arbuthnot of MFC Global Investment. The winners included Sirius XM, CBS Corp. and Brazilian oil and gas firm OGX.
The biggest fund losers were TIS Preservation & Growth and Ark NorthRoad Global, acquired in recent years by Redwood Asset Management Inc. Each fund had an average annual loss of more than 16 per cent over three years. Sales in TIS Preservation & Growth, which has been run by Larry Jeddeloh of Minnesota-based TIS Group, were halted earlier this year, and the fund is "under review," said Redwood president Peter Shippen. The fund has about 80 per cent in cash. Ark NorthRoad Global is also undergoing a makeover. This fund recently was renamed Redwood Global High Dividend, and is now being run by William Dodge of New Jersey-based Fox Asset Management LLC. This fund "had a lot of exposure to U.S. large cap stocks that didn't perform very well," Mr. Shippen acknowledged.
HOW GLOBAL EQUITY FUNDS HAVE FARED OVER THREE YEARS TO OCT. 31
|(As of Oct. 31, 2010)|
|Fund name||Latest MER||Assets ($-mil)||3-yr % rtn||YTD % rtn||2009 % rtn||2008 % rtn||2007 % rtn||2006 % rtn||2005 % rtn|
|Manulife Global Opportunities Class||2.7||245.2||7.01||27.79||61.97||-43.12|
|Hartford Global Leaders D||2.0||16.8||3.15||9.44||23.67||-20.22||-9.02||11.20||-1.94|
|Mackenzie Univ Gl Infrastructure-T5||2.4||25.9||1.62||7.01||17.59||-17.20|
|Mackenzie Ivy Foreign Equity||2.4||1,898.0||1.60||2.36||5.81||-6.69||-4.21||16.00||3.15|
|IG Mackenzie Ivy Foreign Equ Cl-A||2.8||64.8||1.37||2.09||5.65||-6.87||-4.55||15.38||2.52|
|TD Entertainment & Communications||2.7||121.5||1.35||15.49||41.45||-34.57||1.58||25.79||12.76|
|AGF Global Dividend||2.5||15.9||-0.37||6.51||11.48||-16.99|
|Imaxx Global Equity Growth||2.9||6.5||-0.70||3.80||15.80||-18.92||-7.79||11.53||13.44|
|TIS Preservation & Growth||5.0||-16.59||-10.87||-10.40||-24.92|
|Ark NorthRoad Global-A*||4.5||1.8||-16.22||-5.58||4.97||-36.43||-16.57||9.67||9.43|
|Sprott Global Equity||3.3||10.0||-14.81||-0.51||-6.88||-32.95|
|Desjardins Global Equity Value||2.5||186.2||-14.31||-0.98||9.36||-38.83||-15.29||25.08||5.76|
|Brandes Global Equity||2.6||1,277.4||-13.23||1.77||0.72||-33.52||-15.51||24.93||-0.66|
|RBC O'Shaughnessy Global Equity||2.2||121.6||-12.98||8.73||4.06||-38.05|
|AGF Global Value||2.8||1,143.2||-12.88||-0.92||10.95||-36.93||-10.88||19.98||-1.34|
|IA Clarington Global Dividend-T6||2.7||76.4||-12.43||5.63||14.57||-40.82||-3.94|
|MSCI World ($ Cdn)||-5.37||4.03||11.78||-26.05||-7.10||20.58||6.58|
|S&P/TSX Total Return||-1.73||10.37||35.06||-33.00||9.83||17.26||24.13|
|*Renamed Redwood Global High Dividend Fund In November. Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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