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.
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 tgam.ca/cruncher.)
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.
TOP CANADIAN EQUITY FUNDS - THE FIVE-YEAR VIEW
|(as of July 31)|
|Name||($-mil)||MER||% Rtn||Quartile||% rtn||Quartile|
|Mawer Canadian Equity||156.3||1.24||6.06||1||17.30||1|
|Claymore Cdn Fundamental Index ETF||n/a||0.72||5.55||1||7.44||4|
|DFA Canadian Core Equity A||n/a||1.49||4.84||1||14.45||1|
|IA Clarington Canadian Leaders||234.7||2.38||4.72||1||2.64||4|
|iShares S&P/TSX 60 Index||10,180.7||0.17||4.66||1||8.85||3|
|iShares S&P/TSX Cap Composite Index||1,349.1||0.27||4.65||1||12.27||2|
|Beutel Goodman Canadian Equity-D||1,725.9||1.53||4.61||1||9.57||3|
|Fidelity Cdn Disciplined Equity-A||517.9||2.49||4.50||1||13.29||1|
|RBC Canadian Index||649.3||0.70||4.20||1||12.60||2|
|Value Contrarian Canadian Equity||n/a||2.50||3.98||1||10.66||2|
|Scotia Canadian Index||254.6||0.99||3.98||1||12.26||2|
|Altamira Canadian Index||277.6||0.65||3.97||1||9.00||3|
|TD Canadian Index||955.1||0.86||3.90||1||12.39||2|
|Leith Wheeler Canadian Equity B||123.6||1.57||3.88||1||14.53||1|
|Bissett Canadian Equity-A||497.0||2.52||3.81||1||13.49||1|
|CIBC Canadian Index||751.8||1.12||3.76||1||12.09||2|
|Bissett Canadian Equity CC-A||31.7||2.51||3.75||1||13.17||1|
|IG FI Canadian Equity-A||836.6||2.72||3.74||1||11.01||2|
|Source: Globeinvestor, company websites|
© 2007 The Globe and Mail. All rights reserved.
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