Resources stocks, the Canadian stock market’s former bread and butter, have struggled in recent years. Let’s see which funds excelled without the help of these former staples.
We searched for the 15 best performers among Canadian equity, Canadian focused equity (which can invest up to 49 per cent in foreign stocks) and Canadian dividend and income equity funds for one year to Nov. 30, 2013. U.S. dollar, segregated and duplicate versions of funds were excluded. We also omitted funds with a minimum investment of more than $25,000 and those catering to a professional group.
What did we find?
Fidelity Canadian Growth Company B rose to the top with a 45.7-per-cent gain.
But only four of the fund’s top 10 positions are actually Canadian stocks, where the fund usually has about half of its holdings internationally, particularly in the United States.
“Growth in Canada is tricky because the Canadian economy is so cyclical and resource heavy,” said Mark Schmehl, the fund’s portfolio manager. Staying away from gold and resources was a simple way to avoid trouble this year, he said.
But there were a few winning investments. Manulife Financial Corp. climbed 60 per cent in the one-year period to Nov. 30. Mr. Schmehl also owns a few banks.
Still, Mr. Schmehl is less concerned with geography than he is with finding innovative companies that are changing things for the better. He names big data software company Splunk Inc. and commercial real estate company CoStar Group Inc. as examples.
Social media stocks LinkedIn Corp. and Facebook Inc. performed well for the fund this year. Mr. Schmehl was attracted to them for their innovative work.
“They’re changing the way we do things – the way we consume media, and the way we live our lives,” he said. “They’re also harvesting all this data about people and what we do. … It’s very exciting as a growth investor.”
In the coming year, the portfolio manager will be watching health care stocks in the United States and Canada. He is particularly inspired by the science behind immunotherapy and drugs that could one day cure cancer. One holding, Valeant Pharmaceuticals International Inc., is a homegrown health care stock that has done well this year, up 106 per cent in the twelve months to Nov. 30.
The Fidelity Canadian Large Cap B also posted a return of more than 40 per cent in the period, coming third in the chart. BMO’s S&P/TSX Equal Weight Industrials Index ETF placed second, with gains of 41.3 per cent in the year.
Fifteen leading Cdn. equity funds for the year ended Nov. 30, 2013
* 'm' stands for 'maximum' (it's a new fund). Source: Lipper