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Mutual Fund News

Stock funds that have stood the test of time

swon@globeandmail.com

What are we looking for?

Canadian stock funds that have aged well.

We examined how mutual funds with at least two decades under their belt have fared.

The screen

We screened for the best-performing 15 funds in the Canadian equity, Canadian focused equity and Canadian dividend and income categories for the 20 years ended Jan. 31. We excluded U.S.-dollar and duplicate versions of funds as well as those sold to only one professional group.

What did we find?

Most of the top funds outpaced the annualized 9.8-per-cent for the S&P/TSX Total Return Index. But while some funds look good over the long haul, there are always wrinkles.

Keep in mind that one manager is unlikely responsible for the 20-year track record. Even the investment style of a fund could have changed during that time.

Dynamic Power Canadian Growth emerged with the best 20-year record, posting an average annual return of 13.6 per cent. The fund, which has been run since 1999 by Dynamic Funds manager Rohit Sehgal, has lagged the index in recent years, but outperformed over 10 and 20 years.

When Mr. Sehgal took over, he overhauled the fund by changing the investment style to look for growth stocks. The fund was called Dynamic Canadian Growth during the 1990s even though it was run by two former managers who picked stocks using a value-oriented approach. That fund merged with Mr. Sehgal's Power Canadian Fund, but kept the longer track record of Dynamic Canadian Growth. The long-term performance of the merged fund has been helped by a 100-per-cent gain in 1993 generated by former fund manager Jonathan Baird, who has recently resurfaced at NexGen Financial LP.

Dynamic Value Fund of Canada has also aged well with a 10.7-per-cent annualized return over two decades. This fund also went through a management change with David Taylor taking over the helm in 2003.

His fund's 10-per-cent annualized return over 10 years has surpassed Dynamic Power Canadian Growth's 8.6-per-cent gain over the same period.

Mackenzie Saxon Stock Fund emerged as the second-best performer over 20 years with an average annual return of 12 per cent. A team led by Suzann Pennington of Mackenzie Financial Corp. took over in the fall of 2009 from former manager Rick Howson.

The fund charges a fee of more than 2 per cent.

However, its long-term performance was helped for most of the fund's life by a lower fee of 1.75 per cent. (In the past, this fund was sold directly to investors or through discount brokers by Saxon Financial Inc., which was bought by Mackenzie over two years ago.)

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TOP-PERFORMING CANADIAN STOCK FUNDS OVER 20 YEARS

% Returns as of Jan. 31, 2011
Fund nameCategoryMERAssets($-mil)1year3year5year10year15year20year
Dynamic Power Canadian GrowthCanadian Focused Equity2.321,706.522.2-2.13.88.610.013.6
Mackenzie Saxon Stock Fund-SICanadian Equity2.02341.624.45.04.09.610.412.0
PH&N Dividend Income-DCanadian Div. & Incm Equity1.112,029.517.52.22.66.712.112.0
Bissett Canadian Equity-FCanadian Equity1.27733.525.67.14.67.110.411.4
Dynamic Value Fund of CanadaCanadian Focused Equity2.341,438.721.16.77.610.010.210.7
Manulife AdvantageCanadian Focused Equity2.48527.813.1-3.8-1.9-0.46.510.6
TD Dividend GrowthCanadian Div. & Incm Equity1.923,577.816.42.13.28.110.910.6
Altamira Canadian Equity GrowthCanadian Focused Equity2.30581.624.43.34.92.95.510.3
IA Clarington Cdn Conservative EqtyCanadian Equity2.41262.920.65.73.57.411.010.3
Mackenzie Maxxum DividendCanadian Div. & Incm Equity2.381,437.913.40.81.34.68.410.3
TD Canadian EquityCanadian Focused Equity2.072,837.825.42.94.87.410.110.1
Mackenzie Cundill Cdn Security 'A'Canadian Focused Equity2.101,434.427.07.23.97.110.210.0
CI Canadian InvestmentCanadian Focused Equity2.343,865.720.53.83.58.610.49.6
AGF Canadian Large Cap Div-ClassicCanadian Focused Equity1.762,553.420.61.33.15.58.79.4
PH&N Canadian Equity-DCanadian Equity1.11844.220.31.63.15.98.89.3
S&P/TSX Total Return25.54.15.56.29.19.8
Assets are for all versions of funds. Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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