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The best mutual funds for growth

Investing professionals give their top picks for those looking for quality long-term bets

INVESTMENT REPORTER

Last year was a stellar one for stocks, particularly U.S. stocks, and the mutual funds invested in them.

Now, investors might need to look a little harder for top prospects.

With the RRSP deadline in mind, we asked investing professionals for their top mutual fund picks for growth investing.

GREG NEWMAN

Senior wealth adviser, The

Newman Group, a ScotiaMcLeod affiliate

1. Dynamic Power American Growth Fund

Based on the idea that gains are to be made through concentrated holdings, this fund consists of a portfolio of 20 to 40 stocks. "As a pure bottom-up stock picker, [portfolio manager Noah] Blackstein focuses on identifying companies that have the propensity to become dramatically larger companies," Mr. Newman said.

2. Trimark Europlus

Evidently on the mend, Europe has suddenly caught the attention of the world's investors. This fund also runs a concentrated portfolio, focusing on high-quality European stocks with substantial growth potential.

3. Trimark Global

Small Companies

"As economies around the world recover, the growth prospects for small and mid-cap companies are quite positive," Mr. Newman said.

This fund aims to identify smaller companies with proven growth potential that may have been overlooked by investors.

DAVE PATERSON

Fund analyst, D.A. Paterson

& Associates

1. Fidelity Canadian

Large Cap Fund

This fund managed to dramatically outperform the S&P/TSX over the last year by avoiding materials, limiting exposure to energy and financial stocks and betting heavily on technology, consumer defensive and health-care sectors, Mr. Paterson said.

"This is a great core holding for most investors," he said, although he expects more modest returns this year.

2. Black Creek Global

Leaders Fund

This fund has a "go anywhere mandate," scouring for high quality companies in markets across the world, Mr. Paterson said.

"They focus on companies that have the ability to grow by taking market share, introducing new products or expanding into new markets."

The fund's focus is long-term, and it makes no attempt to time the market, so expect relatively high volatility.

3. EdgePoint Global Portfolio

Primarily focused on U.S. stocks, this fund seeks to identify high-quality companies trading below fair value.

"If you have a longer-term time horizon and can stomach some short-term underperformance in exchange for the probability of outperformance over the longer term, then this is a great fund to consider," Mr. Paterson said.

DAN HALLETT

Director of asset management, HighView Financial Group

1. Mackenzie Cundill Recovery

This fund, which tries to identify global stocks due for a turnaround, has underperformed global stocks recently, mostly due to investments in emerging markets and real estate.

That could change, however, considering the fund manager's estimate that the portfolio's stocks "trade at a composite discount of almost 50 per cent of the companies' composite values," Mr. Hallett said.

2. Trimark Canadian Fund

Having weathered the market crash relatively well compared to its benchmark and its competitors, this fund also staged a strong recovery on the upswing.

But the fund still saw big outflows, and at half the size it was a decade ago, "it's one of the most under-appreciated funds that I can think of," Mr. Hallett said.

*****

FUNDS FOR GROWTH INVESTING

Fund6-mo. % rtn1-yr % rtn3-yr % rtn5-yr % rtn10-yr % rtnMERTotal Assets ($-mil)Category
Dynamic Power American Growth31.8456.6219.3723.409.831.69931.1U.S. Equity
Trimark Europlus Series A14.3227.8917.1215.015.682.98279.9European Equity
Trimark Global Small Companies Class A16.335.6220.5225.642.66156.6Glbl Sml/MdCp Equity
Fidelity Canadian Large Cap B10.7331.7416.0621.6612.042.273,368.0Cdn. Focused Equity
Black Creek Global Leaders A20.1433.3711.5617.052.59632.0Global Equity
EdgePoint Global Portfolio A14.4839.3615.0518.252.222,128.8Global Equity
Mackenzie Cundill Recovery Series C8.063.92-2.1914.665.272.601,021.5Glbl Sml/MdCp Equity
Trimark Canadian Fund, Series A9.6616.476.7714.204.712.711,490.4Cdn. Focused Equity
% returns to Jan. 31. Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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