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Mutual Fund News

On the hunt for stronger markets abroad

rcarrick@globeandmail.com

What we're looking at

Thanks to our strong dollar and our heavy commodity exposure, the Canadian stock market has been a much better spot for investors in the past decade than global markets. In 2011, however, the tables have turned and global markets are stronger. Let's look at some funds you can investigate if you're looking for exposure to stock markets outside Canada.

Our screen

All funds in the global and international equity categories have been ranked by their 10-year returns to April 30. We've also provided one-year results so you can see how these funds have been doing lately. The quartile numbers tell you how a fund's one-year returns have done in comparison with others in the category. First quartile is best, fourth is worst. Note that global equity funds may include all countries, including a sliver of Canada in some cases, while international equity funds invest outside North America.

What we found

First off, it should be noted that the average global and international equity funds lost 0.3 per cent and 0.6 per cent, respectively, on an annual basis over the 10 years to April 30. The returns for most of the funds in today's screen aren't spectacular when viewed on their own, but in the context of what global funds have done in general, they're good. It's also worth noting how many of the top 10-year global and international equity funds are big players in the recent global stock market rally.

An important question to ask before buying a global or international equity fund is whether it uses currency hedging to limit the effect of currency volatility on returns. An example of a fund that has used hedging: Dynamic Global Discovery. An example of a fund that has not used it: Mawer World Investment.

Hedging was a big help to global fund returns as the Canadian dollar soared in the past decade. But with our dollar now at high levels versus the U.S. dollar and other currencies, it's reasonable to expect some slippage in the years ahead. That would give global funds that aren't using hedging an advantage.

*****

LONG-TERM TOP PERFORMERS IN THE GLOBAL AND INT'L EQUITY FUND CATEGORIES

Fund Name CategoryAssets ($-mil)MER (%)10-yr % rtn (Apr. 30)1-yr % rtn (Apr. 30)1-yr Quartile
Dynamic Global DiscoveryGlobal Equity827.52.636.8911.462
Dynamic Power Global Growth ClGlobal Equity652.32.456.7141.421
Mackenzie Cundill Value 'A'Global Equity209.22.164.7310.752
Mackenzie Cundill Value ClassGlobal Equity571.52.494.4710.262
TD Entertainment & CommunicationsGlobal Equity136.02.754.4418.961
Mackenzie Cundill Value 'C'Global Equity5,287.82.464.3710.392
GBC International GrowthInternational Equity109.41.953.6920.801
Mawer World InvestmentInternational Equity363.21.473.6516.931
Primerica Aggressive GrowthGlobal Equity707.82.693.5111.262
Dynamic Global Value FundGlobal Equity944.12.393.214.764
Mackenzie Ivy Foreign Equity-AGlobal Equity1,941.42.472.608.123
Invesco International Growth ClassInternational Equity122.02.642.0812.902
CIBC International Small CompaniesInternational Equity66.22.871.7814.991
Tradex Global EquityGlobal Equity9.22.491.6813.151
Mackenzie Focus International ClassInternational Equity22.12.761.427.913
Acadian Core International EquityInternational Equity176.51.331.3513.691
Integra International EquityInternational Equity48.01.311.1310.892
Trimark Fund-SCGlobal Equity959.61.621.127.323
Investors Global-CGlobal Equityn/a2.901.103.994
AGF Global Equity ClassGlobal Equity363.72.830.9611.882
CI International ValueInternational Equity91.82.440.559.043
Renaissance International EquityInternational Equity71.52.690.477.074
Renaissance Global FocusGlobal Equity64.42.740.4512.701
Source: Globeinvestor.com

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