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World globe and bar graph (Comstock Images/Getty Images/Comstock Images)

Number Cruncher

Top Canadian funds investing globally Add to ...

What are we looking for?

Top performing global equity funds run by Canadian managers.

The screen

We searched for the 15 top annualized returns in global equity funds for the year ended Feb. 28, 2013. U.S. dollar, segregated and duplicate versions were excluded, as well as those closed to new investors.

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What did we find?

 

Evidence of investors’ rotation back into equities is still being debated, but when it comes to mutual funds, global and U.S. equity products may be best positioned to capture benefits from a shift.

Indeed, if industry experts are correct, such a move could have a rebalancing effect. Some fund managers say investors own too much Canada – they are too highly exposed to the country – and the high currency isn’t helping returns. Canada has underperformed in the last year and a half compared to other countries, and that could lead to significant inflows for the global equities asset class.

Paul Holden, analyst at CIBC World Markets, recently noted that over last 13 years, the amount that Canadian investors have invested in global equity funds has dropped to 8.4 per cent of long-term funds from 31.6 per cent. In the last five years, global equity funds’ net redemptions averaged $5-billion per year.

But that may now be turning around. Mr. Holden is calling for a “reverse to $5-billion per year over the next decade to bring foreign equity allocation back to prior levels.”

Manulife Special Opportunities Class was the top performer in this screen, with a 23.6-per-cent gain for the year to Feb. 28, compared to the MSCI World index’s total return of 16.1 per cent.

But the fund, which was started in 2011, is a bit of an outlier. While categorized as a global fund, the portfolio currently skews toward U.S. equity and debt securities of leveraged companies.

“We have the flexibility to go anywhere, but right now we’re seeing the best opportunities in the U.S. Our knowledge of companies is best in the U.S. as well, because a lot of these companies are below investment grade,” said Manulife portfolio manager Dennis McCafferty. Given that focus, investors should expect a little more volatility in this product.

Following Manulife in the chart are Fiera Sceptre Global Equity Class B and Black Creek Global Leaders A, with gains of 21.6 per cent and 21 per cent, respectively.

While there may be opportunities abroad, many of the funds in the screen were started recently – less than half have five-year returns to report, and only three were around a decade ago.

Follow on Twitter: @j2nelson

 

Global equity funds, ranked by one-year returns to Feb. 28, 2013

Fund Symbol 1-yr
% rtn
(Feb. 28)
5-yr
% rtn
(Feb. 28)
Manulife Special Opport Class 23.60%
Fiera Sceptre Global Equity Class B 21.60% 2.00%
Black Creek Global Leaders A 21.00% 6.00%
BMO Global Infrastructure Index ETF ZGI-T 20.30%
Renaissance Global Infrastructure Cl-A 19.70% 4.20%
Front Street Global Opportunities Cl 19.50%
Sun Life MFS MB Global Value 17.90%
EdgePoint Global Portfolio FE 17.70%
Stone & Co. Flagship Global Growth A 17.60% 3.60%
RBC O'Shaughnessy Global Equity 17.60% -2.80%

Source: Lipper

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