WHAT WE'RE UP TO
Investors are always being told to "buy low," but it's human nature to pick a fund that's a winner, not a loser. To encourage the bargain-hunter in you, let's look at some funds that have been substandard in the past three years but have risen to the top in the past six months.
TODAY'S SEARCH
We start with all funds that ranked third or fourth quartile for the three years to May 31. Quartiles divide funds in a category into four groups, with the first quartile representing premium performance and the fourth the most dismal returns. To find the best turnaround candidates, we then isolated funds that ranked in the first quartile for the past six months. Funds on our list are ranked by assets.
SO WHAT DID WE TURN UP?
A varied list of fund names that will provide lots of buy-low ideas for people with new money to invest. Example: Acuity High Income, a higher-risk balanced fund that looks to be emerging from a slump. Six-month returns can reflect luck as much as managerial acumen, but Acuity High Income is a fund with a record of outperformance in the long term.
Some of the funds on the list have delivered top-quartile results in the past six months, even while losing money. Remember - quartiles measure comparative performance, not absolute returns. Losing less money than other funds is not the greatest marketing hook for a fund, but it's still an achievement for the likes of AIC American Focused and Saxon World Growth. For different reasons, both have been bottom dwellers in recent years. Now, new management seems to be helping the AIC fund, while the Saxon fund could be a hint of a turnaround for the value style of investing. (See this week's Portfolio Strategy for more on value investing.)
Mention must be made of the two exchange-traded funds on the list, the iShares Cdn Energy Sector Index Fund and the iShares Cdn Gold Sector Index Fund. ETFs, with their ultralow fees, are supposed to outperform most mutual funds. However, both the energy and gold ETFs have been lower-quartile performers in the past three years with below-average returns. Don't write these ETF off, though. Both rule their categories over more recent time periods.
| First quartile funds | As of May '08 | As of May '08 | ||||
| Assets | Last reported | 6-month | 3-year | |||
| Fund name | Category | ('000) | MER | MER | % return | % return |
| IA Clarington Canadian Dividend | Canadian Dividend & Income Equity | 2,259,222 | 5/30/2008 | 2.74 | 4.63 | 9.01 |
| BMO Equity | Canadian Equity | 2,225,465 | 9/28/2007 | 2.30 | 9.44 | 15.18 |
| TD Canadian Blue Chip Equity | Canadian Focused Equity | 1,338,322 | 4/30/2008 | 2.25 | 4.93 | 9.72 |
| Acuity High Income | Canadian Equity Balanced | 1,286,207 | 1/31/2007 | 2.30 | 6.31 | 6.56 |
| iShares CDN Gold Sector Index | Precious Metals Equity | 958,940 | 5/30/2008 | 0.55 | 2.82 | 24.28 |
| Desjardins Dividend | Canadian Dividend & Income Equity | 943,565 | 5/30/2008 | 2.10 | 3.15 | 8.33 |
| ABC Fundamental Value | Cdn. Focused Small/Mid Cap Equity | 783,875 | 3/31/2005 | 2.00 | 2.75 | 7.24 |
| Manulife Growth Opportunities Fund | Canadian Small or Mid Cap Equity | 772,353 | 12/31/2007 | 2.61 | 8.08 | 11.88 |
| iShares CDN Energy Sector Index | Natural Resources Equity | 663,057 | 5/30/2008 | 0.55 | 34.94 | 25.38 |
| RBC Global Energy | Natural Resources Equity | 620,731 | 5/30/2008 | 2.08 | 27.26 | 21.81 |
| United-Real Estate Invest Pl Cl W | Real Estate Equity | 524,386 | 5/30/2008 | 0.22 | -3.24 | 3.38 |
| PH&N Overseas Equity-A | International Equity | 515,291 | 5/30/2008 | 1.46 | -5.01 | 4.37 |
| Dynamic FocusPlus Energy Inc Trust | Natural Resources Equity | 477,983 | 6/29/2007 | 2.26 | 31.78 | 17.55 |
| AIC Canadian Focused | Canadian Focused Equity | 461,304 | 5/30/2008 | 2.46 | 8.59 | 8.72 |
| Trimark Europlus | European Equity | 377,853 | 4/30/2008 | 2.44 | -2.75 | 7.12 |
| Acuity Growth and Income | Canadian Focused Equity | 358,888 | 1/31/2007 | 2.85 | 9.53 | 9.56 |
| CI Global Bond | Global Fixed Income | 332,390 | 5/30/2008 | 2.02 | 4.34 | -2.25 |
| PH&N U.S. Equity-A | U.S. Equity | 322,513 | 5/30/2008 | 1.16 | -1.87 | -2.88 |
| Saxon World Growth | Global Small/Mid Cap Equity | 320,953 | 5/30/2008 | 1.86 | -1.32 | -0.64 |
| Dynamic FocusPlus Equity | Canadian Focused Equity | 319,524 | 6/29/2007 | 2.47 | 8.18 | 9.51 |
| AIC American Focused | U.S. Equity | 308,423 | 5/30/2008 | 2.44 | -2.90 | -11.43 |
| IA Clarington Cdn Conservative Eqty | Canadian Equity | 280,522 | 5/30/2008 | 2.42 | 9.35 | 10.67 |
| imaxx Canadian Fixed Pay | Canadian Equity Balanced | 242,455 | 5/30/2008 | 2.61 | 6.43 | 5.75 |
| Mackenzie Balanced | Canadian Equity Balanced | 226,491 | 6/29/2007 | 2.37 | 6.27 | 6.81 |
| IA Clarington Diversified Income-T | Canadian Equity Balanced | 203,607 | 5/30/2008 | 2.28 | 8.57 | 5.95 |
| Trimark International Companies-A | International Equity | 176,773 | 4/30/2008 | 2.45 | -3.81 | 2.18 |
| Lakeview Disp Leadership Hi Inc A | Canadian Small or Mid Cap Equity | 168,848 | 5/30/2008 | 2.26 | 8.61 | 9.36 |
| SEI U.S. Small Co. Equity-O | U.S. Small or Mid Cap Equity | 151,492 | 5/30/2008 | 0.13 | -2.12 | -5.21 |
| Golden Opportunities Fund Inc. | Retail Venture Capital | 134,299 | 8/31/2007 | 4.40 | 2.18 | 2.19 |
| AGF Canadian Conservative Income | Canadian Fixed Income Balanced | 128,075 | 5/30/2008 | 1.76 | 2.31 | 1.94 |
| ABC Fully-Managed | Cdn. Focused Small/Mid Cap Equity | 125,505 | 3/31/2005 | 2.00 | 6.88 | 0.23 |
| Scotia Global Growth | Global Equity | 101,920 | 4/30/2008 | 2.83 | -0.78 | 2.37 |
| Mackenzie Cundill Global Div-T5 | Global Equity | 96,787 | 6/29/2007 | 2.51 | -1.89 | 2.84 |
| Beutel Goodman Int'l Equity | International Equity | 95,285 | 3/31/2008 | 1.38 | -4.80 | 2.67 |
| Copernican Intl Div Income | International Equity | 80,290 | 5/30/2008 | 2.50 | -0.85 | 2.88 |
| Trimark U.S. Companies | U.S. Equity | 76,275 | 4/30/2008 | 2.61 | -2.76 | -3.56 |
| Altamira Global Value | Global Equity | 75,586 | 5/30/2008 | 2.68 | -1.80 | -2.84 |
SOURCE: GLOBEFUND
Rob Carrick