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Mutual Fund News

The 20-10 club: Upstarts need not apply

rcarrick@globeandmail.com

What we're looking for

Funds that have been kicking out solid returns over the past 20 years.

Our screen

Introducing the 20-10 club - funds in all categories that have 20-year compound average annual returns of 10 per cent or more. We've provided three-year returns here as well so you can compare long and shorter term numbers.

What we found

Mostly precious metal and resource funds, which is no surprise because these sectors have been gone crazy in recent years. It's worth noting that a fund can stroll along for years doing nothing special, then hit its stride and end up with very good average returns over the long term. That's investing math for you. Suggestion: Use Globeinvestor.com's fund profiles to see how consistent a fund's returns are.

A big question in looking at the funds on this list is what to make of any discrepancies between the 20-year numbers and the three-year numbers. In the case of a few funds, most of them heavily into gold, resources or small-size stocks, the recent numbers match up well to the long-term numbers.

Mackenzie Universal Canadian Resource is an example from the group of funds where recent results are way below the long-term pattern. The average annual 20-year return to April 30 was an excellent 14.6 per cent, but the three-year return of 0.8 per cent is way below the resource fund category average of 2.2 per cent.

Could this be an opportunity to buy low in the natural resources sector? Fred Sturm has been running the fund since 1978, so he's totally responsible for the great 20-year numbers. Another manager who's been there all along over the past 20 years is Francis Chou, who runs the pair of Chou funds on the list.

Final note: Funds on this list with high management expense ratios may have charged performance fees to unitholders.

*****

FUNDS WITH 20-YEAR AVERAGE ANNUAL RETURNS OF 10 PER CENT OR MORE

Fund Name CategoryAssets ($-mil)MER (%)20-yr % rtn3-yr % rtn
Front Street Growth-BCanadian Small or Mid Cap Equity256.02.3920.9415.19
RBC Global Precious MetalsPrecious Metals Equity1,600.12.0918.8130.16
Front Street Special Opp Cdn CC-BNatural Resources Equity179.19.1618.4519.48
Northwest Specialty EquityCanadian Small or Mid Cap Equity229.52.5316.888.12
Mawer New CanadaCanadian Small or Mid Cap Equity152.11.4315.1011.06
Mackenzie Univ Canadian ResourceNatural Resources Equity1,956.32.4714.590.82
Northwest Specialty GrowthCanadian Small or Mid Cap Equity100.17.4614.5811.07
Dynamic Precious MetalsPrecious Metals Equity1,149.22.6013.8529.21
Sceptre Equity Growth-ACanadian Small or Mid Cap Equity453.61.5813.823.94
ABC Fundamental ValueCanadian Focused Small/Mid Cap Equity566.12.0013.150.68
Altamira ResourceNatural Resources Equity226.12.3112.968.68
Dynamic Power Canadian GrowthCanadian Focused Equity1,946.22.3212.60-5.60
National Bank Small CapitalizationCanadian Focused Small/Mid Cap Equity582.82.3712.2610.48
RBC Global EnergyNatural Resources Equity521.52.0912.26-4.67
Mackenzie Saxon Small Cap-SICanadian Small or Mid Cap Equity139.42.0712.166.34
Chou AssociatesGlobal Small/Mid Cap Equity488.91.7912.113.95
GBC Canadian GrowthCanadian Focused Small/Mid Cap Equity377.01.8911.986.41
PH&N Dividend Income-DCanadian Dividend and Income Equity2,106.21.1411.903.00
Mackenzie Saxon Stock Fund-SICanadian Equity299.42.0211.503.41
AGF Canadian Resources ClassNatural Resources Equity380.42.9811.262.55
Chou RRSPCanadian Focused Small/Mid Cap Equity137.71.8010.686.38
BMO GDN Enterprise ClassicCanadian Small or Mid Cap Equity23.62.1810.6510.51
TD Dividend GrowthCanadian Dividend and Income Equity5,382.01.9810.513.01
Dynamic Value Fund of CanadaCanadian Focused Equity2,475.12.3410.404.94
Manulife AdvantageCanadian Focused Equity497.32.4610.19-1.50
Mackenzie Maxxum DividendCanadian Dividend and Income Equity1,325.22.4210.180.83
All returns to April 30, 2011. Source: Globeinvestor.com

© 2007 The Globe and Mail. All rights reserved.

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