Best Canadian Mutual Funds: Where To Invest?

Mutual funds are a popular investment choice in Canada, with total assets exceeding $2 trillion as of April 2022. They are a type of investment tool where money is pooled from numerous investors to create a fund that is then invested in different financial assets like stocks, bonds, and money market investments. The main advantages of mutual funds are that they offer portfolio diversification, professional management, low costs, and convenience. However, there are also some disadvantages, such as sales charges, high expense ratios, and poor trade execution. When choosing a mutual fund to invest in, it is important to consider factors such as performance history, management expense ratio, investment strategy, fund size, and manager expertise. While there are many mutual funds available in Canada, the best-performing ones in 2023 include the CI Canadian Dividend Fund Series F, AGF Global Select Series F, and Mawer Global Equity Fund.

Best Canadian Equity Mutual Funds

When considering the best Canadian mutual funds to invest in, it's important to remember that the best mutual funds usually have a low expense ratio (MER) and stable annual returns over a long timeframe.

CI Canadian Dividend Funds Series F

This fund has an impressive 10-year annual return of 10.41%, outperforming its benchmark index. It is invested in both US and Canadian equities, with an 80% allocation of the fund in local stocks. It has a small initial buy-in of $500, making it an attractive option for investors.

Mackenzie Bluewater Canadian Balance Fund Series F

With a 10-year annual return of 9.56%, this fund is composed of 60% stock and 40% fixed-income bonds, mostly from Canadian companies. It also has some international asset investments. It is owned by IG Wealth Management and managed by its subsidiary, Mackenzie Financial. Its management fee is a relatively low 1%.

AGF Global Select Series F

This global equity fund has a 10-year annual return of 16.49%. It is composed of 50% US assets, 2.7% Canadian assets, and the rest is invested in the EU, Asia, and Latin America. It provides instant diversification for investors. The initial investment is $500, with a minimum of $25 for subsequent investments.

Mawer Global Equity Fund

This fund has a simple mandate: to deliver solid long-term returns via investment portfolios of steady, seemingly unspectacular stocks. Its most notable holdings include Johnson & Johnson, Microsoft, and convenience store giant Alimentation Couche-Tard. It has beaten other comparable equity funds over the last ten years by approximately 1% per year after expenses. It has a minimum initial investment of $500 and is RRSP and TFSA eligible.

RBC Life Science and Technology Series F

This fund has a 10-year annual return of 18.82%, surpassing its benchmark by almost 4% per year. It is worth considering during good economic times, as it benefits from a strong economy and increased optimism. However, it tends to perform worse than safer investments when market sentiment turns negative. Its 0.94% MER eats into any dividends.

TD U.S. Mid-Cap Growth Fund Class F

This fund has a 10-year annual return of 14.63%. It includes top holdings in companies like Hologic Inc., Ingersoll-Rand, and Textron Inc. It charges an elevated management fee of 1.13% MER, but this is acceptable as it consistently delivers returns higher than its benchmark. The minimum investment required is $100.

Best Global Equity Mutual Funds

When it comes to global equity mutual funds, investors have a variety of options to choose from. Here are some of the best global equity mutual funds in Canada:

RBC Vision Global Equity Fund F Series

RBC's Vision Global Equity Fund is an excellent choice for investors seeking global stock exposure. This fund has delivered stellar performance over multiple time frames and has a long performance track record to back it up. With $1.34 billion in assets under management, it is considered a large fund. The fund focuses on large global stocks with a growth style and is labelled as a medium-risk investment. The management expense ratio (MER) for this fund is 0.75%, which is relatively low compared to its peers.

NBI Global Equity Fund F Series

National Bank's NBI Global Equity Fund is another excellent choice for investors seeking global exposure. This fund has performed well and has a medium-length performance track record. With $1.46 billion in assets under management, it is considered a massive fund. The fund focuses on large global stocks with a growth style and is labelled as medium risk. The MER for this fund is 1.11%, which is slightly higher than some of its competitors.

Canoe Global Equity F Series

Canoe's Global Equity Fund is a great option for Canadians, offering excellent performance across several time frames and a medium-length track record. This fund has $956.53 million in assets under management, making it a very large fund. The fund's mandate is to invest in large global stocks with a growth style, and Canoe labels it as a medium-risk investment. However, it's important to note that the MER for this fund is 1.25%, which is relatively higher than its peers.

Mawer Global Equity Fund

Mawer Global Equity Fund is an independent asset manager based in Calgary. Their mandate is simple: deliver solid long-term returns by investing in steady and seemingly boring stocks. Their strategy is captured by their slogan, "Be Boring. Make Money." The fund is filled with stocks from well-known companies that people encounter in their everyday lives, such as Johnson & Johnson and Microsoft. Most Canadian online brokerages offer this fund, and it has a minimum initial investment of $500, making it accessible to a wide range of investors.

AGF Global Select Series F

AGF Global Select is a global equity fund with investments in the US, Canada, the EU, Asia, and Latin America. This fund provides instant diversification for investors. While it had an unimpressive start, shedding more than half its value during the bear market of 2002-2003, it has rebounded strongly and now offers excellent returns. The MER for this fund is 1.22%, and it has over $3 billion in assets, making it a solid choice for investors seeking global exposure.

When considering global equity mutual funds, it is important to assess factors such as performance history, management expense ratios, investment strategy, fund size, and manager tenure and expertise. By evaluating these factors, investors can make informed decisions about which funds align with their investment objectives and risk tolerance.

Best Canadian Fixed-Income Funds

When it comes to investing, fixed-income funds are a great option for those seeking regular set returns over a specified period of time with minimal risk. In Canada, fixed-income funds are often managed by financial professionals and provide diversified investment solutions to retail investors. Here are some of the best Canadian fixed-income funds to consider:

BMO and TD Canadian Aggregate Bond Index ETFs

The BMO and TD Canadian Aggregate Bond Index ETFs are excellent choices for those seeking to invest in fixed-income funds. These funds cover the gamut of short-, medium-, and long-term bond holdings, providing a diverse range of options to suit different investment strategies. The BMO fund is known for its low fee structure, while the TD fund tracks the Solactive Broad Canadian Bond Universe TR Index, offering an average duration of 6.9 years and a yield of 4.2%.

IShares Core Canadian Short Term Bond Index ETF (XSB)

The iShares Core Canadian Short Term Bond Index ETF (XSB) is ideal for those seeking reduced duration risk. It is a short-duration fund with a weighted average duration of 2.55 years and lower duration risk. This fund provides a cost-effective way to invest in a diversified portfolio of high-quality Canadian bonds.

IShares Core Canadian Long Term Bond Index ETF (XLB)

The iShares Core Canadian Long Term Bond Index ETF (XLB) is a suitable option for those who believe that interest rates will decline. This fund focuses on long-term bonds and presents the possibility of delivering a significant portion of returns in the form of capital gains, making it a tax-efficient strategy for non-registered accounts.

Canada Life Money Market Fund

The Canada Life Money Market Fund is perfect for short-term investors with a low-risk tolerance. This fund primarily invests in Canadian money market instruments such as treasury bills and short-term government and corporate debt. It aims to maximize income while preserving capital and maintaining liquidity, making it a stable choice for conservative investors.

Canada Life Core Bond Fund

The Canada Life Core Bond Fund is a suitable option for short to medium-term investors who can handle bond market volatility and have a low-risk tolerance. This fund primarily invests in Canadian government and investment-grade corporate bonds, offering interest income and moderate capital growth potential.

Mawer Global Equity Fund

The Mawer Global Equity Fund is another excellent choice for fixed-income investors. With a 10-year annual return of 12.51%, it has consistently outperformed comparable equity funds. This fund is known for its simple yet effective mandate: delivering solid long-term returns through investment portfolios of steady, seemingly unspectacular stocks. Some of its notable holdings include Johnson & Johnson, Microsoft, and Alimentation Couche-Tard.

RBC Life Science and Technology Fund

The RBC Life Science and Technology Fund is a strong contender, with a 10-year annual return of 18.82%. This fund tends to perform well during good economic times and has surpassed its benchmark by almost 4% per year. However, it is important to note that it performs worse than safer investments when market sentiment turns negative, and its MER can eat into dividends.

TD U.S. Mid-Cap Growth Fund

The TD U.S. Mid-Cap Growth Fund is another fund worth considering, with a 10-year annual return of 14.63%. This fund provides access to a diverse range of holdings, including unfamiliar but promising companies. While it charges a higher management fee, it delivers good long-term value and consistently outperforms its benchmark.

Remember, when investing in fixed-income funds, it is essential to assess your risk tolerance, investment goals, and time horizon. Conduct thorough research, understand the fees involved, and consider seeking advice from a financial professional before making any investment decisions.

Best Global Fixed-Income Funds

When choosing a mutual fund to invest in, it is important to consider the fund's management style, returns, and fees. It is also crucial to compare how the mutual funds of different companies work and to understand the market benchmark that will affect the overall result of the fund.

PIMCO Monthly Income Fund F Series

PIMCO's monthly income fund is one of the most well-known bond funds in Canada. It is a staple in most investment advisors' models on the fixed-income side. The fund has excellent performance and a long track record. In terms of size, it is one of the largest Canadian mutual funds by assets under management, with $23.08 billion in assets under management. The strategy is somewhat sensitive to changes in interest rates, and it invests in average-quality bonds. The fund is categorized as low risk.

NEI Global Total Return Bond Fund F Series

This fund is a great option as a global fixed-income mutual fund. It has great performance over different time frames and a long track record. With $1.27 billion in assets under management, it is a large mutual fund in the global bond category within Canada. The strategy is very sensitive to changes in interest rates, and it invests in high-quality bonds. The fund is categorized as low risk.

Desjardins Global Tactical Bond Fund F Series

Desjardins is a very popular investment manager in Quebec. Their global tactical bond fund is an excellent option for global fixed-income exposure in your portfolio. The fund has great performance over time and a long track record. With $380.74 million in assets under management, it is a large mutual fund in the global bond category within Canada. The strategy is modestly impacted by changes in interest rates, and it invests in average-quality bonds. The fund is categorized as low-to-medium risk.

Manulife Yield Opportunities F

This fund falls under the global fixed-income balanced funds category, which must invest less than 70% of total assets in a combination of equity securities domiciled in Canada and Canadian dollar-denominated fixed-income securities. It has a Morningstar Star Rating of Gold.

Sun Life Dynamic Strategic Yield F

This fund is part of the global neutral balanced category, which contains funds with a roughly 50/50 split between stocks and bonds (ranging from 40-60%) and at least 30% invested outside of Canada. It has a Morningstar Star Rating of Gold.

Best Balanced Mutual Funds

Balanced mutual funds are usually less aggressive and invest money in several asset classes, often mixing stocks and bonds. Here are some of the best balanced mutual funds to consider:

Lysander-Canso Balanced Fund F Series

This fund has delivered phenomenal performance over multiple time periods and has a long track record. Although it is a small mutual fund by assets, it is not small enough to put it at risk of closing down in the future. This fund invests in medium-size stocks that are trading at cheap valuations, and targets medium-quality bonds with low sensitivity to interest rate changes. It is considered a medium-risk fund.

Manulife Fundamental Balanced Class F Series

Manulife is a firm mostly recognised for insurance, but it also offers some excellent investment mandates in Canada. This fund has a long performance track record with excellent results and is a fairly large mutual fund by assets under management. It invests in large, growth-oriented stocks and targets medium-quality bonds with high sensitivity to interest rate changes. It is considered a low-to-medium-risk fund.

Invesco Select Balanced Fund F Series

Invesco is a well-known name in the Canadian investment space. This fund has delivered great performance over time and has a very long track record. It is a large mutual fund by assets. The fund invests in both large growth and large value stocks, and targets medium-quality bonds with high sensitivity to interest rate changes. It is considered a low-to-medium-risk fund.

Mackenzie Bluewater Canadian Balance Fund Series F

This fund has a long history of solid returns, even as it has grown to $5.4 billion in assets. It is invested in a mixture of Canadian stocks and bonds, with a small number of assets invested in international markets. The fund fee is under 1%. It is considered a medium-risk fund.

Scotia Global Balanced Fund

Scotiabank is one of the top mutual fund providers in Canada, offering a range of funds to suit different investor needs. While I don't have specific details on this fund's performance and fees, its long-term track record and the bank's reputation make it worth considering.

Frequently asked questions