What we're looking at
Occasionally over the past several months, we've used this space to look at mutual funds offered by small, low-profile companies that don't get a lot of exposure.
This week brings another instalment of this exercise, starting off with a twist.
Our focus is the Meritage lineup from National Bank Mutual Funds, which is one of the largest fund groups in the country.
Meritage products are built on the fund-of-funds idea, which means each holds a small basket of best-of-breed funds from other companies.
Products like these are of no great merit in general, but National Bank has done some interesting things with Meritage.
First, complete objectivity in the selection of the underlying funds has been ensured by only using third-party funds.
No National Bank funds are used. Also, several funds from competing bank fund families are included (examples: TD Canadian Bond, RBC Canadian Dividend).
Funds are selected for inclusion on the basis of performance and the quality and consistency of their managers.
The funds presented here are ranked by assets.
To assess their performance, we've presented their quartile rankings over the past three years (the funds aren't old enough for a longer-term view).
Quartiles divide funds in a category in four groupings - a ranking in the first and second quartiles is what you want to see as an investor.
What we found
It should be noted upfront that Meritage portfolios are expensive.
Expect to pay the fees of the underlying funds, plus a markup.
Meritage Balanced Portfolio has a management expense ratio of 2.34 per cent (that's underlying funds plus any markup).
There are good competing funds from companies such as RBC, CIBC, Dynamic and Fidelity that have MERs of 1.14 to 2.06 per cent.
Still, our screen shows that Meritage portfolios have almost exclusively turned in first-quartile rankings in the past three years.
Take Meritage Balanced Portfolio, for example.
It has consistently provided above average results with lower than average volatility, and its loss in 2008 of 12.9 per cent was comparatively mild.
MERITAGE PORTFOLIOS (FROM NATIONAL BANK MUTUAL FUNDS)
|Fund name||Asset Category||Assets ($-mil) (as of Nov. 30)||LatestMER||3-yearQuartile||3-year AverageAnnual Return (%)|
|Meritage Balanced Portfolio||Canadian Neutral Balanced||212.9||2.34||1||3.8|
|Meritage Balanced Income Portfolio||Canadian Neutral Balanced||132.0||2.35||1||3.7|
|Meritage Conservative Income Port||Canadian Fixed Income Balanced||129.7||2.08||1||5.0|
|Meritage Growth Portfolio||Canadian Neutral Balanced||114.7||2.34||1||2.9|
|Meritage Global Equity Portfolio||Global Equity||91.8||2.61||1||-2.2|
|Meritage Equity Portfolio||Global Equity Balanced||80.5||2.60||1||1.7|
|Meritage Conservative Portfolio||Canadian Fixed Income Balanced||56.5||2.09||1||4.4|
|Meritage Moderate Portfolio||Canadian Fixed Income Balanced||45.2||2.09||1||3.8|
|Meritage Equity Income Portfolio||Canadian Equity Balanced||42.2||2.60||1||2.3|
|Meritage Canadian Equity Portfolio||Canadian Equity||41.4||2.60||1||0.5|
|Meritage Moderate Income Portfolio||Canadian Fixed Income Balanced||36.5||2.08||1||4.3|
|Meritage Growth Income Portfolio||Canadian Neutral Balanced||32.2||2.34||1||3.1|
|Meritage American Equity Portfolio||U.S. Equity||5.6||2.60||3||-7.8|
|Meritage International Equity Port||International Equity||5.5||2.61||1||-8.7|
|Figures as of Nov. 30. Source: Globeinvestor.com|
© 2007 The Globe and Mail. All rights reserved.
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