With literally thousands of mutual funds available for sale in Canada, tyring to find a fund or mix of funds that will have the potential to deliver strong risk adjusted relative returns can be a very daunting task. Our Recommended List of Funds does a lot of that heavy lifting for you. We have analyzed more than 1500 funds and narrowed the investment universe down to our best ideas. This comprehensive report includes what we feel are the best funds in a wide range of asset classes, includes quick bullet points on the fund and the current environment, and provides ideas on how to put your own portfolios together. This tool is a great way to help reduce the time you spend selecting funds and building portfolios and gives you more time to build and maintain client relationships.
Below, you will find our Recommended List of Funds reports. Subscribers have access to the most current reports, which are updated quarterly. If you would like reports from 2009 or 2010, feel free to email us at info@paterson-associates.ca with your request.
Recommended List of Mutual Funds – July 2018
Download a PDF Version of this Report . Additions NONE Deletions Guardian Global Dividend Growth Fund (GCG 570 – Front End Units) – It’s no secret that I’ve been frustrated by the performance of this Fund for some time. While some of this underperformance is a function of the Fund’s investment style, it has also been lagging other Funds with comparable mandates more frequently. Because of this, I have opted to remove the Fund from the Recommended List. The Fund is managed by Sri Iyer and the systematic equities team at Guardian Capital. The...
read moreETF Focus List – June 2018
iShares S&P/TSX Small Cap Index ETF (TSX: XCS) – The iShares S&P/TSX Small Cap Index ETF provides exposure to a diversified portfolio of Canadian small cap stocks. It replicates a market cap weighted index that holds more than 200 individual positions, with the top ten making up under 15% of the portfolio. While it may be diversified on an individual security basis, it is more concentrated on a sector basis, with energy and materials representing more than half the ETF. Given the sector mix of the Canadian market, I don’t expect that this composition will change dramatically in the near term. The index and ETF are rebalanced quarterly.
read moreRecommended List of Mutual Funds – April 2018
Additions
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Deletions
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Funds of Note
Fidelity Canadian Large Cap Fund (FID 231 – Front End Units, FID 031 – Low Load Units) – It’s no secret that I’ve been frustrated by the performance of this fund over the past few quarters. The fund struggled through the latter part of 2016 and all of 2017. The main reason for this underperformance was the its defensive positioning. Manager Dan Dupont follows a very disciplined value-focused approach. Consequently, as valuations crept higher, he became more defensive, both in terms of stock selection and in increasing his cash weighting.
ETF Focus List – March 2018
I am adding XBB to the ETF Focus List to replace the Vanguard Aggregate Bond Index ETF (TSX: VAB), which had been my top bond pick for the past year or so. There are a couple of reasons for this change. First, when I added VAB, it carried a management fee that was significantly lower than XBB. Until recently, XBB had a management fee of 0.30%, which resulted in an MER of 0.34%. In May 2017, iShares cut the management fee to 0.09%, which results in a significant reduction in the MER and make the two ETFs more competitive from a cost perspective. Further, the outlook for interest rates has shifted, with further increases expected. XBB has a higher exposure to corporate bonds, which results in a higher yield-to-maturity and lower duration, translating into a modestly lower sensitivity to interest rates.
read moreRecommended List of Mutual Funds – January 2018
Franklin Bissett Core Plus Bond Fund (TML 200 – Front End Units, TML 515 – Low Load Units) – Over the past few years, Franklin Bissett has quietly grown out its fixed-income team and the results are now starting to show. This was one of the strongest-performing bond funds in 2016, gaining 3.3%, placing it in the first quartile for performance and outpacing its peers. In 2017, the fund gained 2.9%, while the broader Canadian market was rose by 2.5%.
The fund’s goal is to provide strong risk-adjusted returns and a steady income stream over a full market cycle. To do this, the management team, headed by Tom O’Gorman, uses a process of top-down macro analysis and bottom-up sector and security analysis.
read moreETF Focus List – December 2017
First Asset Canadian REIT ETF (TSX: RIT) – In the REIT space, this is the only actively managed ETF available. It is managed by the team of Lee Goldman and Kate MacDonald, using a bottom up, fundamental investment process that looks for growth oriented REITs with high quality assets, low payout ratios, and reasonable leverage. In addition to asset quality, the team looks for REITs or REOCs in higher growth markets that can add value through development or intensification. They like companies that are fully financed and are less dependent on the capital markets to allow them to effectively execute their strategy.
read moreRecommended List of Mutual Funds – October 2017
Lysander-Canso Short Term and Floating Rate Income Fund (LYZ 805A – Front End Units) – In the bond space, there are few shops that are as well respected as Canso Investment Counsel, the managers of Lysander-Canso Short Term & Floating Rate Fund. Manager John Carswell aims for high current income and some long-term capital appreciation with a fundamentally-driven credit analysis process.
Carswell can invest not only in traditional short-term bonds, but also in floating-rate securities and convertible bonds. The fund has a go-anywhere mandate, but as of the end of July, more than 90% of the portfolio was invested in Canada.
read moreETF Focus List – September 2017
Additions
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Funds of Note
PowerShares Senior Loan CAD Hedged ETF (TSX: BKL.F)
Vanguard Canadian Short Term Bond ETF (TSX: VSB)
PowerShares S&P/TSX Composite Low Volatility ETF (TSX: TLV)
iShares Core S&P 500 Index (CAD Hedged) ETF (TSX: TLV)
BMO MSCI EAFE Index (CAD Hedged) ETF (TSX: ZDM)
iShares S&P/TSX Capped Financials ETF (TSX: XFN)
Recommended List of Mutual Funds – July 2017
Additions
IA Clarington Floating Rate Income Fund (CCM 9940 – Front End Units, CCM 9942 – Low Load Units) – With the recent upward pressure on yields, investors are looking for ways to protect their portfolios. One asset class that can help do that is floating rate notes and loans, which pay a rate of interest that floats with a market interest rate, usually LIBOR. In most cases, this coupon rate is reset monthly, more or less eliminating duration risk. These loans are typically unrated, non-investment grade credits, that are often well-collateralized with seniority in the capital structure, providing protection against potential defaults. Another benefit is floating rate investments tend to have low correlation to the more traditional asset classes, making them a strong diversifier when incorporated in a well-diversified portfolio.
read moreETF Focus List – June 2017
Additions
None
Deletions
None
ETFs of Note
Vanguard Canadian Aggregate Bond ETF (TSX: VAB) – Bonds did well over the three months ending April 30, as Canadian yields drifted lower across the board. At the short end of the curve, the yield on the Canadian five-year benchmark bond fell from 1.11% to 1.00%, while the ten-year dropped from 1.75% to 1.54%. At the long end of the curve, yields fell from 2.41% to end the period at 2.16%. Because bond prices move in the opposite direction of yields, bonds rallied higher, with this ETF, which represents a broad spectrum of Canadian bonds, gaining a very respectable 2.9%.
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