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The Gold Medal Goes To?

Thursday, February 25, 2010


When I meet other advisors around town, many ask me which fund companies I like and why. With the 2010 Games presently being staged in Vancouver, I’ll stay with an Olympic theme and give you my favorite mutual fund companies and explain why I like them. This is my personal list, which changes over time due to fund managers coming or going and performance numbers.

Bronze- Acuity Funds

About 10 years ago, I had a client request for socially/environmentally responsible investments. My research found that very few companies (then or now) have much to offer in this small, but growing segment. I stumbled upon a small (at the time) Canadian fund company that had a few funds to satisfy clients who wished to buy environmentally responsible funds for their portfolios. Acuity also has a line-up of pooled funds that are available to investors with $150,000 to invest. The pooled funds have a few important benefits; 1) lower management fees than standard funds, 2) the ability to deduct fees in open accounts and 3) good performance numbers.

Every fund company likes to say how they are different than the rest, but few really have noticeable differences. Acuity does. All of their portfolio managers are key owners in the company, so no start managers get headhunted by the competition. Many of their portfolio managers have science and engineering backgrounds, whereas almost all other portfolio managers have a pretty similar education background. They never have just one manager on a fund. Each manager only buys on his area of specialty within a fund. Acuity has had some excellent performance numbers in the last 10 years which helped attract advisors and assets.

Silver-Fidelity/RBC

Both of these fund companies are very well managed and consistently post upper quartile performance numbers. They both have excellent diverse product line-ups, good research and analytical information. Fidelity’s Clearpath life cycle funds, which get more conservative as unit holders approach their target dates, performed very well in a terrible 2008 environment and have since come back strongly in 2009. I just don’t see any negatives with these two excellent fund companies.

Gold-Dynamic

Dynamic Funds have been outperforming their peers for so long; it’s definitely not luck or a few star managers dragging the average up. When I look at performance figures from the various categories (Canadian Equity, Dividends, Global, International Equity, Natural Resources, European Equity among others) they have top funds in almost every category. Their portfolio managers are great stock pickers, who for the most part had big losses in 2008 (like most managers), but have had even bigger gains in 2009 to offset the ‘08 losses. Many funds with Dynamic have great 1 year numbers, so I like the idea of a monthly investment program rather than investing $100,000 as a lump sum into a fund that just posted a 50% plus year return.

The only negative I have with Dynamic is when I see a MER on one of their funds at 4-5%, which occurs on certain funds that outperform their peer group by margin. Our industry has been under attack from many high profile writers who like EFT’s, mostly due to lower fees. Excessive fees of over 3% just give them more ammunition to use against the industry.

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Generic Mutual Fund Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated.

Personal Opinions & Recommendations Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call the author to discuss your particular circumstances.


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