What are we looking for?
Dogs of the past decade.
It pays to do a reality check of fund performance because not every fund manages to produce profits for investors over the long haul. Many struggling funds will close or merge before reaching their 10th anniversary.
We looked at the biggest losers for the 10 years ended Aug. 31. U.S. dollar, segregated, and duplicate versions of funds were excluded.
What did we find?
Several venture-capital funds spilling red ink.
VenGrowth II Investment, had an annual average loss of 13.9 per cent over 10 years, while VenGrowth Investment shed 8.8 per cent a year, and New Generation Biotech Equity, 10.2 per cent.
But this trio, more commonly known as labour-sponsored funds, has now bitten the dust. They, along with VenGrowth III Investment, VenGrowth Traditional Industries and VenGrowth Advanced Life Sciences, all merged this month into Covington Fund II, which is run by Covington Capital Corp.
Labour funds have had a tough time raising money after the Ontario government reduced, then eliminated its tax credit for these investments. Federal credits are still available for these funds, which require an eight-year hold to compensate for the risk in investing in early-stage private companies.
VenGrowth Asset Management Inc. tried to sell its funds to Covington last fall, but faced a proxy fight from rival GrowthWorks Ltd. VenGrowth shareholders last month voted for a deal offered by Covington Capital, which acquired New Generation Biotech Equity several years ago.
Covington Fund II now has $350-million in assets versus $50-million before the merger. That means that investors in some VenGrowth funds, where redemptions had been halted, will be able to redeem more of their cash over the next several years as monies are raised from selling investments or companies going public, said Scott Clark, managing partner with Covington Capital.
DOGS OF THE PAST DECADE TO AUG. 31, 2011
|(Aug. 31)||Latest||(Aug. 31)||(Aug. 31)||Calendar year % return|
|Fund name||Category||Assets ($-mil)||MER||10-yr % rtn||YTD % rtn||2010||2009||2008||2007||2006||2005||2004||2003||2002||2001|
|VenGrowth II Investment Fund Inc.||Retail Venture Capital||100.2||4.79||-13.9||-21.5||-27.9||-22.0||-24.1||-12.6||-2.4||-4.0||-5.1||-8.3||-4.9||-0.2|
|Manulife Global Advantage||Financial Svcs.Equity||16.0||3.00||-10.5||-7.2||-7.5||29.9||-57.4||-23.5||22.2||6.2||6.0||6.1||-35.9||-28.5|
|New Generation Biotech Equity-I||Retail Venture Capital||9.5||7.18||-10.2||-7.5||-32.8||-7.6||-10.7||-5.1||-20.0||-5.7||-3.1||13.4||-16.2||n/a|
|VenGrowth Invst Fund Inc. Cl A SrE||Retail Venture Capital||32.2||4.17||-8.8||-4.8||43.4||-32.1||-37.0||-9.6||6.1||-3.9||-10.5||-2.9||-16.5||-25.5|
|Manulife Value||U.S. Equity||54.6||2.51||-7.6||-8.3||7.8||12.4||-42.0||-28.6||22.6||-2.0||-1.0||-1.1||-20.0||-6.8|
|Manulife American Advantage||Financial Svcs. Equity||21.0||2.88||-6.8||-14.2||0.6||28.8||-45.9||-21.9||12.3||8.7||-4.7||3.1||-17.5||-9.3|
|Renaissance US Equity Growth||North American Equity||28.0||2.73||-6.5||-7.0||13.9||10.1||-37.8||-9.5||2.3||2.0||-3.0||3.2||-30.2||-11.4|
|TD International Value-I||International Equity||644.3||2.55||-6.4||-13.9||-3.2||10.7||-40.0||-14.4||22.3||4.4||6.8||8.2||-24.1||-23.3|
|Scotia U.S. Blue Chip||U.S. Equity||26.5||2.69||-6.3||-5.2||4.0||-3.7||-27.1||-7.9||8.5||0.0||-1.1||-4.3||-23.8||-12.7|
|Meritas U.S. Equity||U.S. Equity||8.8||2.87||-6.1||-5.7||4.2||7.4||-27.8||-16.9||9.5||-1.4||-1.7||-3.3||-21.1||n/a|
|RBC Life Science & Technology||U.S. Equity||84.9||2.15||-5.9||-6.5||11.6||26.3||-29.3||0.5||-1.8||-3.0||-9.2||16.6||-48.0||-31.4|
|AGF Japan Class||Japanese Equity||15.3||3.24||-5.8||-11.1||8.3||-13.2||-21.0||-23.0||2.4||17.0||6.5||13.5||-16.5||-27.9|
|BMO Global Science and Technology||U.S. Equity||34.5||2.50||-5.8||-4.7||3.4||20.0||-25.0||-12.6||-6.3||4.6||-0.4||4.8||-34.9||-27.2|
|Mackenzie Cundill Global Div-T5||Glbl Sml/MdCp Equity||32.3||2.53||-5.7||-23.2||7.8||22.8||-39.5||-13.8||20.3||6.2||1.8||5.2||-23.0||-14.8|
|HSBC U.S. Equity-I||U.S. Equity||36.0||2.40||-5.6||-8.5||8.7||9.1||-30.0||-11.5||11.0||0.9||-1.7||2.1||-27.8||-11.1|
|S&P/TSX Total Return||8.1||-3.5||17.6||35.1||-33.0||9.8||17.3||24.1||14.5||26.7||-12.4||-12.6|
|MSCI World ($ Cdn)||-0.5||-5.2||6.8||11.8||-26.1||-7.1||20.6||6.6||7.3||9.4||-20.2||-11.4|
|S&P 500 Composite ($ Cdn)||-3.8||-3.5||7.2||5.5||-23.8||-12.2||13.6||-0.2||1.5||3.4||-24.0||-7.7|
|Source: Globe Investor, Bloomberg|
© 2007 The Globe and Mail. All rights reserved.
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