It's RRSP season, and that means the annual mutual fund treasure hunt is under way for investors.
There are roughly 11,300 total funds and fund variations to sift through this year, so you'd better get busy. Or, get yourself some help.
That's where we come in, with our list of 12 good mutual funds and exchange-traded funds for registered retirement savings plans and tax-free savings accounts. We'll walk through the list here and you can find out more about each fund by clicking on the link for each or by exploring Globe Investor's new mutual fund and ETF websites. They are ideal places to begin your own fund research.
Some key points about the list of 12 good funds: Mutual funds were considered only if they have a track record of at least 10 years. ETFs, which have generally been around less time, were required to have a history of at least five years. Funds must rank in the first or second quartile for the past three- and 10-year periods (quartiles rank funds in a category into four groups – first quartile represents the top performers over a given time period, and fourth is worst).
For ETFs, three- and five-year quartiles were considered. The emphasis is on core funds, or those that could account for the major part of a portfolio. Final cuts were made by favouring funds that have impressed me during my years as personal finance columnist for The Globe and Mail.
Here's the list, in alphabetical order:
1. Beutel Goodman Canadian Equity
This is so predictable – the stock markets took off last year and this fund couldn't keep up with the fast crowd. Oh well. This is your kind of fund only if you keep your eye on long-term performance and don't get fussed about what's happening at the moment. Long-term results are above average, with much less volatility than the broader stock market.
2. CI Harbour
This fund's results are good enough to have prompted me to pick its chief stock picker, Gerry Coleman, as money manager of the decade (you can read about him here). Risk-adjusted returns are the story with this fund. It manages down markets comparatively well, and it gets its fair share of rising markets. The long view is 10 years of returns that demolish the S&P/TSX composite index.
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Investor Education on mutual funds:
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3. CI Signature High Income
Balanced funds are a hot commodity with investors right now, and this is quite a good one. It regularly beats its peers in the global neutral balanced category, and with far less volatility. The portfolio was about 42-per-cent tilted to bonds at the end of last year, suggesting a cautious stance. At 1.52 per cent, the management expense ratio way undercuts the peer average of 2.38 per cent.
4. Dynamic Value Fund of Canada
A superior performer that, unusually, got only mildly hammered in 2008. Its loss of 28.2 per cent compares with a drop of 30.7 per cent for the average Canadian focused equity fund, and 33 per cent for its benchmark stock index. There's a heavy 55-per-cent concentration in energy and mining stocks here, so don't get complacent about risk.
5. iShares CDN Bond Index Fund
This ETF – think of an index-tracking mutual fund that trades like a stock – gives you exposure to the entire Canadian bond market (government plus corporate) concentrated in one little pill. Toss it into your portfolio and you’ve got your bond coverage taken care of. The MER is 0.30 per cent, compared with an average of 1.68 for Canadian bond funds.
