What are we looking for?
Global stock markets gyrated last week on investor concerns about the implications of the Standard & Poor's downgrade of U.S. debt and continued euro-zone debt problems. Given the increased market volatility this year, let's see which Canadian stock funds have managed to stay in positive territory.
We looked for the 15 top performers among Canadian stock funds this year to Aug. 15. We included Canadian equity, Canadian dividend and income and also Canadian focused equity funds, which can invest up to nearly 50 per cent in foreign stocks. U.S. dollar, segregated and duplicate versions of the funds were excluded.
What did we find?
Canadian stock funds invested in preferred shares were sitting pretty, while the S&P/TSX Total Return Index was off 12 per cent.
Within this niche of funds, Omega Preferred Equity emerged at the top of the heap with a 2.9 per cent gain followed by Manulife Preferred Income, up 2.7 per cent and Claymore S&P/TSX Preferred Share exchange-traded fund, up 2.3 per cent.
Preferred shares, unlike their common-share cousins, have the characteristics of both a stock and bond. Investors make money from preferred shares mainly through their dividends, and have a greater claim on a company's assets and earnings in the event of bankruptcy. But preferred shares are also like fixed-income investments because they are sensitive to swings in interest rates.
Omega Preferred Equity is run by the asset management arm of insurer Intact Financial Corp., formerly ING Insurance Co. of Canada. Intact, which has run a portfolio of preferred shares since the late 1980s, was tapped to run this mutual fund for National Bank of Canada in 2007.
Among common share funds, Value Contrarian Canadian Equity and Standard Life Diversified Income outpaced peers, respectively, gaining 0.41 per cent and 0.17 per cent.
Value Contrarian Canadian Equity got some help during the recent downturn by having just over 20 per cent in cash built up from the sale of "fully valued positions," and having a lack of exposure to battered commodity stocks except for a few oil names, said Benjamin Horwood, president of Value Contrarian Asset Management. Winners in his fund this year have included Paladin Labs Inc. and, until recently, Exxon Mobil Corp.
HOW LARGE-CAP CANADIAN STOCK FUNDS FARED THIS YEAR TO AUG. 8
|Assets||YTD % rtn||Calendar year % returns|
|Fund name||MER||($-mil)||Category||(Aug. 8)||2010||2009||2008||2007||2006||2005|
|Omega Preferred Equity||1.52||395.1||Cdn Div & Incm Equity||2.9||9.0||26.6||-16.0||n/a||n/a||n/a|
|Manulife Preferred Income||2.27||51.9||Cdn Div & Incm Equity||2.7||5.2||n/a||n/a||n/a||n/a||n/a|
|Claymore S&P/TSX Pref Share ETF||0.50||727.4||Cdn Div & Incm Equity||2.3||6.6||26.2||-17.1||n/a||n/a||n/a|
|JOV Leon Frazer Preferred Equity-A||1.87||41.6||Cdn Div & Incm Equity||1.2||6.0||n/a||n/a||n/a||n/a||n/a|
|Value Contrarian Canadian Equity||2.50||25.6||Canadian Equity||0.4||12.0||32.6||-28.8||5.5||10.1||14.4|
|PS Canadian Preferred Share Idx A *||1.65||68.8||Cdn Div & Incm Equity||0.2||n/a||n/a||n/a||n/a||n/a||n/a|
|Standard Life Diversified Income-A||2.46||12.6||Cdn Focused Equity||0.2||8.0||16.3||-12.5||1.5||1.6||n/a|
|Desjardins Fn Pl Ethical Cdn Equity||0.75||0.9||Canadian Equity||-0.2||14.0||n/a||n/a||n/a||n/a||n/a|
|Fidelity Canadian Large Cap-A||2.49||117.4||Cdn Focused Equity||-2.1||17.3||36.9||-29.9||13.7||9.1||28.7|
|iShares Diversified Monthly Income||0.55||304.1||Canadian Equity||-2.4||15.7||40.4||-25.9||6.0||-3.2||n/a|
|Claymore S&P/TSX Cdn Dividend ETF||0.64||567.7||Cdn Div & Incm Equity||-3.6||15.2||38.2||-30.4||6.3||n/a||n/a|
|RBC Canadian Equity Income||2.06||668.5||Cdn Div & Incm Equity||-3.8||24.0||59.5||-18.8||9.5||n/a||n/a|
|McLean Budden Dividend Income Equ D||1.25||17.6||Cdn Div & Incm Equity||-4.4||12.8||27.4||-25.7||0.2||n/a||n/a|
|Trimark Cdn Plus Dividend Class A||2.46||53.0||Cdn Focused Equity||-4.4||9.9||26.7||-25.8||n/a||n/a||n/a|
|O'Leary Canadian Equity Yield-A **||2.34||1.4||Canadian Equity||-4.5||n/a||n/a||n/a||n/a||n/a||n/a|
|S&P/TSX Composite Index||-13.2||14.4||30.7||-35.0||7.2||14.5||21.9|
|S&P/TSX Total Return||-12.0||17.6||35.1||-33.0||9.8||17.3||24.1|
|* Launched in June, 2011; ** Launched in April, 2010. Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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