Skip to main content

WHAT WE'RE LOOKING AT

Cheap-to-own balanced funds, which are the most popular category of mutual fund right now.

OUR SCREEN

Story continues below advertisement

There are three variations of balanced funds - equity-focused, neutral and fixed income-focused. We considered all mainstream funds in these categories with management expense ratios (MERs) of less than 1.5 per cent, and then ranked them from the largest size on down. The average MER for Canadian balanced funds is about 2.4 per cent.

MERs are your best measure of how much it costs to own a fund. They gather almost all the expenses associated with running a fund and express them as a percentage of assets. Published fund returns have had fees deducted.

WHAT WE FOUND

Plenty of cheaply priced options for the many investors who like the idea of buying a fund that balances holdings in both stocks and bonds. The big banks dominate the list with a selection of monthly income funds that have done very well over the past five years.

Come to think of it, every fund on our list is in the first or second quartile over the past five years, and the same goes for all but a few names in the past three years. Who says low fees aren't your friend? Quartiles, by the way, are a way of dividing funds in a category into four groups according to their returns. First quartile is tops, fourth is the dregs.

Investors bought almost $21-billion worth of balanced funds in the past 12 months on a net basis (purchases minus sales), which makes them by far the favourite category of mutual fund. Some in the fund industry react to high demand with high fees. Don't be suckered. Fees are crucial with balanced funds because they have substantial bond holdings. Interest rates are still low these days by historical standards, which means you can't afford to have high fees eroding your returns.

Check your balanced fund MERs, and then look at the value you're getting in the form of returns. If there's an imbalance, today's Number Cruncher can help you find alternatives.

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter