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Mutual funds are the predominant vehicle in Canadian wealth management, (Fred Lum/The Globe and Mail)
Mutual funds are the predominant vehicle in Canadian wealth management, (Fred Lum/The Globe and Mail)

Finance February

Nine funds that combine safety and growth Add to ...

Exchange-traded funds get most of the attention these days, but mutual funds remain the predominant vehicle in Canadian wealth management. As of the end of 2013, ETF investments accounted for just 6 per cent of the $1-trillion under management in ETFs and mutual funds, according to Investor Economics.

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Critics lament their relatively high fees, but mutual funds are still very much in demand as an easy vehicle for younger and middle-class Canadians to save. So with the deadline for RRSP contributions approaching, we asked investing professionals for their top conservative mutual fund picks.

 

Greg Newman

Senior wealth adviser,

The Newman Group, a ScotiaMcLeod affiliate

1. Dynamic Strategic Yield Fund

This fund has managed to deliver both high levels of income and capital growth, exceeding the return on the S&P/TSX composite index since starting up in 2009, while experiencing less volatility, Mr. Newman said. The fund has experienced only nine days on which it lost more than 1 per cent. “While the mandate is yield, the managers have the flexibility to avoid asset classes they believe may be at risk.”

 

2. Sentry Conservative

Balanced Income Fund

Also positioned to generate both income and capital gains, this fund is diversified across conservative, large-cap fixed-income and income-oriented stocks. “The portfolio managers focus on high quality companies with solid management teams, strong balance sheets, low debt and firms that can generate free cash flow,” Mr. Newman said.

 

3. RBC QUBE Low Volatility

Canadian Equity Fund

This fund tries to maintain returns while minimizing volatility by focusing on profitable companies with low debt and stable returns, These stocks tend to do better during short-term sell-offs, as well as over the longer term, Mr. Newman said. “This strategy has gained momentum amongst institutional investors and may eventually resonate with retail investors.”

 

Dave Paterson

Fund analyst, D. A. Paterson &

Associates

1. Sentry Conservative Balanced Income Fund

This fund has delivered superior risk-adjusted returns through fairly active management of the asset mix.

“The fixed-income sleeve is more conservatively positioned than the DEX Bond Universe, with a higher yield and a lower duration,” Mr. Paterson said.

 

2. Steadyhand Income Fund

Corporate bonds currently account for this fund’s greatest weighting, with the balance in high-yielding equities and REITs. “While I don’t expect it to deliver the same level of gains that it has of late, I do think it will handily outpace traditional bond funds,” Mr. Paterson said. “If you have a higher risk tolerance, you may want to consider using this as part of your fixed income allocation.”

 

3. CI Signature High Income Fund

“This has been one of my favourite funds for years,” Mr. Paterson said. It invests in fairly high-yielding stocks as well as corporate and high-yield bonds. That asset mix, which includes exposure to medium-cap stocks, may make this fund riskier than its low historic volatility might suggest.

 

Matthew Ardrey

Manager of financial planning,

T.E. Wealth

1. PH&N Short Term Bond & Mortgage D

“This fund offers some diversification to traditional fixed income with a shortened duration, investment in corporate debentures and mortgages,” Mr. Ardrey said. It also has a low MER and has held up well against its peer average over the longer term.

 

TD Canadian Bond Index Fund E

This is another low-cost fund, with an MER of 0.5 per cent, which “has been ahead of its peer average in all longer term periods and ahead of the index in most,” he said. It is limited, however, to investors with TD accounts.

 

RBC Monthly Income Fund

“This fund provides a mix of fixed and Canadian dividend income for its investors,” he said. Over periods in excess of three years, the fund has outperformed both its peer average and its benchmark.

Globe app users please click here for table.

Editor's Note: An earlier online version of this table had incorrect numbers for the PH&N U.S. Dividend Income Fund. This version has been corrected. An earlier online version also contained incorrect fund picks for Mr. Ardrey.

Follow on Twitter: @tshufelt

Mutual funds for conservative investing

Fund6-mo.
avg % rtn
(Jan. 31)
1-yr
% rtn
3-yr
% rtn
5-yr
% rtn
10-yr
% rtn
MERTotal
Assets
($-mil)
Category
Dynamic Strategic Yield Fund7.549.557.532.285,644.8Glbl Neut Bal
Sentry Conserv. Balncd Incm Fd7.0111.078.712.251,201.6Cdn Neutl Bal
RBC QUBE Low Volatility Cdn Eq Fd6.969.442.05708.6Cdn Equity
Steadyhand Income Fund4.774.607.5611.161.0071.4Cdn Fxd Inc Bal
CI Signature High Income6.467.727.8613.898.321.605,227.2Glbl Neut Bal
PH&N ShrtTrm Bnd & Mortgage D2.182.092.753.663.570.61225.7Cdn ShrtTm Fxd Inc
TD Canadian Bond Index Fund E3.630.994.524.944.640.5Cdn Fxd Inc
RBC Monthly Income Fund7.666.525.309.966.591.29,011.3Cdn Neut Bal

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