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NUMBER CRUNCHER

Balanced funds buoyed by equity gains Add to ...

We look at funds that have posted the best gains in the balanced funds category in the year to Nov. 30, 2013

What are we looking for?

Funds that posted the best gains in the popular balanced funds category.

The screen

We searched for the 15 top performers among all Canadian, global and tactical balanced funds in the year to Nov. 30. U.S. dollar, segregated, pooled and duplicate versions were excluded. We also omitted funds catering to professional groups, and those with minimum investment amounts of more than $25,000.

These stock and bond funds were popular with investors in 2013, and the money continued to pour in through the month of November, according to the most recent data from the Investment Funds Institute of Canada.

What did we find?

The Norrep Tactical Opportunities Fund was the top performer with gains of 33 per cent in the year.

This fund falls in the tactical balanced category, meaning it has a highly flexible asset allocation policy toward equity and fixed income. Portfolio manager Mark Russell said the fund, which was started amid the difficult market conditions in 2011, needed to be able to invest in various asset classes, company sizes and geographic locations.

While this year’s strong performance has been driven primarily by equities, Mr. Russell says he has recently begun increasing the fund’s fixed income exposure through preferred shares.

The Norrep fund invests primarily in North America, with most of the holdings being Canadian companies. “Globally, you have to be very choicey,” Mr. Russell said.

In the coming year, Mr. Russell has his eye on companies with real organic growth potential. These are companies that have been putting money into expanding their businesses, rather than sitting on cash. He cites oil sands player Suncor Energy Inc. as an example now on his radar.

The majority of the top performing balanced funds in the chart fell in the global equity balanced category, however. These funds invest less than 70 per cent of total assets in Canada. EdgePoint Global Growth and Income Portfolio was the best performing fund in that group, returning 32.5 per cent for the year to Nov. 30. It also had the chart’s highest three-, and five-year returns. Slightly down the list, Black Creek Global Balanced fund gained 28.5 per cent in the one-year period. Halfway through last year, Richard Jenkins, Black Creek’s portfolio manager, was selling down soaring U.S. investments as those in Europe and Japan were accelerating.

Now, he says he’s spending more time looking at the emerging markets than he has in seven or eight years. There may be “opportunities for long-term investors in these markets,” where the degree of underperformance has been quite high, he said.

The Chou Bond Series A is the only fixed-income-focused balanced fund to make the chart. The low-fee fund returned 31.3 per cent in the period.

15 Best-Performing Balanced Funds

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