With the RRSP deadline looming on March 1, it's time to consider where to invest your dollars.
Mutual funds are an obvious choice for a registered retirement savings plan (RRSP), but wading through the nearly 3,000 of them for sale in Canada can be daunting.
To help navigate the maze of offerings, we asked four fund watchers to provide their top RRSP fund picks.
James Gauthier, vice-president of investment funds, DundeeWealth Inc.
Manulife Global Focused
This global equity fund was renamed last year (it used to be AIC Global Focused), but it is still run by deep-value investor Ian Lapey of New York-based Third Avenue Management. "Management has a very strong record, and a very diligent investment process," Mr. Gauthier said. The fund, which owns about 20 stocks, has a focus on conglomerates and property companies, primarily in Hong Kong, while its U.S.-dollar exposure is 90-per-cent hedged to blunt the impact of currency fluctuations.
Fidelity Canadian Opportunities
This fund, which can invest in both large and small Canadian stocks, is run by Hugo Lavallée, who took over as manager during the 2008 financial crisis. "This was thrown in his lap, but he managed it well during the downturn, and outperformed his benchmark," Mr. Gauthier said. "Over the past couple of years, small- and mid-caps have outperformed large caps pretty substantially, so he has moved into a good number of large-cap names like Great-West-Life and Research In Motion."
Dan Hallett, director of asset management, HighView Financial Group
PH&N Total Return Bond
This fund, which invests in corporate and government bonds, is "a great core holding" for Canadian investors, Mr. Hallett said. The D series version, which is targeted at do-it-yourself investors, charges a management fee of only 0.57 per cent, while the C series sold through advisers charges 1.11 per cent. More than half the assets are in corporate bonds and the net yield after fees is nearly 3 per cent. Bond funds don't provide the big gains that stock funds do, but are a stable source of income, Mr. Hallett added.
Hartford Global Leaders
The Canadian stock market has been on a hot streak for nine years, but that can't continue forever, Mr. Hallett said. "Current valuations suggest that better opportunities can be found outside of our borders." Bill Kanko, who has run this global equity fund since 2006, oversees a portfolio with just over 20 stocks; he is 50-per-cent invested in the United States. The value-oriented manager, who has run money for industry names such as Trimark, Mackenzie and Invesco, has proven himself in different market environments. The fund is now sold by CI Financial Corp., which recently bought the Canadian fund unit of U.S.-based Hartford Financial Services Group Inc.
Esko Mickels, analyst at Morningstar Canada
Mawer Canadian Equity
Jim Hall, who was recently named Morningstar Fund Manager of the Year, has been managing this low-fee Canadian stock fund since 1999. The fund is light on booming commodity stocks; Mr. Hall prefers to look for growing businesses that have strong management teams and long-term competitive advantages. "If the Canadian market is taking off and is commodity driven, this fund can tend to lag," Mr. Mickels said. "Over all, it tends to weather downturns relatively well."
Beutel Goodman Canadian Equity - D
Mark Thomson, a value-oriented manager, has run this Canadian stock fund since 1999. He looks for good-quality companies that generate lots of recurring free cash flow, Mr. Mickels said. The fund, which is targeted at do-it-yourself investors, charges a low fee of 1.5 per cent. It tends to have a large weighting in financial stocks, but also owns other names such as Molson Coors Brewing Co., Telus Corp. and Cameco Corp. "The fund also has a low exposure to materials stocks," Mr. Mickels said.
Dave Paterson, fund analyst, D.A. Paterson & Associates Inc.
AGF Emerging Markets
Emerging markets offer opportunity because many of their economies are in better shape than those of many developed countries, Mr. Paterson said. AGF Emerging Markets, which is run by manager Patricia Perez-Coutts, is about 50-per-cent invested in Pacific Rim countries and 30 per cent in Latin America. While the fund has delivered stronger performance with lower risk over the long term than its peers, its volatility is "significantly higher" than a Canadian equity fund, according to Mr. Paterson.
Dynamic American Value
The U.S. stock market is expected to "show some decent returns" as the U.S. economy gets a lift from government stimulus and tax cuts, Mr. Paterson said. He says a good way to play this market is Dynamic American Value. It's run by David Fingold, who looks for out-of-favour but growing companies. The fund, which hedges its exposure to the U.S. currency, was recently 30-per-cent invested in both the information technology and energy sectors. "The volatility of the fund is one of the lowest in the category, while the longer-term numbers have been very strong," Mr. Paterson said.