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Mutual Fund News

Sifting for ETFs that can boast a track record

What we're looking at

There are more than 230 exchange-traded funds listed on the Toronto Stock Exchange, but few of them have the long-term track record smart investors look for when evaluating funds of any type. In this week's Number Cruncher series, we look at the ETFs that qualify as core portfolio building blocks and have a track record of five years or longer. ETFs, in their classic form, are index-tracking funds that trade like a stock.

Our screen

We've gathered mutual funds and ETFs in the Canadian equity category and ranked them by the five-year annualized return. One-year returns are less important, but we've thrown them in here just to give you an idea of how these funds have performed during the recent stock market volatility. You'll also find quartile rankings, which divide funds in a category into four groups according to their returns. First quartile is best, fourth is worst. (Only funds that made the five-year top quartile are listed here; read the full list online at

What we found

There are three ETFs in the Canadian equity category that have a five-year track record and they're quite easy to find on this list - they're near the top. Third ranked is the Claymore Canadian Fundamental Index ETF (CRQ), with a five-year annualized return of 5.6 per cent. Skip down a few spots and you'll find the iShares S&P/TSX 60 Index Fund (XIU), which is the biggest ETF in the country by far (pension funds and other institutional investors use it a lot). Right after that comes the iShares S&P/TSX Capped Composite Index Fund (XIC), which holds a broader selection of stocks than the more blue-chip focused XIU.

The fees charged by conventional mutual funds make it tough for them to beat their benchmark stock indexes. If you buy an ETF, you get the index minus a very small fee. The most popular Canadian equity funds have management expense ratios between 1 and 2.3 per cent. Our three ETFs have MERs that are much lower than that.

If you're troubled by the comparatively lacklustre one-year returns for a couple of the ETFs listed here, remember that the five-year results include results from 2008, a very bad year for major stock indexes. These ETFs came through that and still managed top-of-the-chart five-year returns.



(as of July 31)
AssetsLatest5-yr Avg5-yr1-yr1-yr
Name($-mil)MER% RtnQuartile% rtnQuartile
Mawer Canadian Equity156.31.246.06117.301
FÉRIQUE Equity517.60.755.86112.592
Claymore Cdn Fundamental Index ETFn/a0.725.5517.444
DFA Canadian Core Equity An/a1.494.84114.451
IA Clarington Canadian Leaders234.72.384.7212.644
iShares S&P/TSX 60 Index10,
iShares S&P/TSX Cap Composite Index1,349.10.274.65112.272
Beutel Goodman Canadian Equity-D1,725.91.534.6119.573
Fidelity Cdn Disciplined Equity-A517.92.494.50113.291
RBC Canadian Index649.30.704.20112.602
Value Contrarian Canadian Equityn/a2.503.98110.662
Scotia Canadian Index254.60.993.98112.262
Desjardins Environment197.62.353.9716.224
Altamira Canadian Index277.60.653.9719.003
TD Canadian Index955.10.863.90112.392
Leith Wheeler Canadian Equity B123.61.573.88114.531
Bissett Canadian Equity-A497.02.523.81113.491
CIBC Canadian Index751.81.123.76112.092
Bissett Canadian Equity CC-A31.72.513.75113.171
Educators Growthn/a1.753.74111.532
IG FI Canadian Equity-A836.62.723.74111.012
Source: Globeinvestor, company websites

© 2007 The Globe and Mail. All rights reserved.

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