Posted on Saturday, 23rd January 2010 by admin
As we mentioned in our previous post, we are reviewing the best Canadian Mutual Funds issued by the Big Canadian Banks (BMO, Scotia, RBC, TD, CIBC and National Bank). Today, we are looking at the best performing mutual funds during a bear market. We were “lucky” enough to get a really tough year 2008 on the stock market so this was the perfect timing to see which funds perform best in this very hostile environment.
First Category: The Bear Tamers Mutual Funds
These 2 funds were strong enough to show strong results for Canadian neutral balanced funds. In fact, they were showing a loss around -11% in 2008 while most Canadian balanced funds were around -16% to -25%. Interesting enough, on a very short period of time (3 years), they show positive results even though the year 2007 didn’t show much growth on the stock market and the year 2008 was a complete catastrophe.
FUND NAME MER (%) ASSETS ($M) 3 YR QRT 3 YR RTRN 10 YR QRT 10 YR RTRN
BMO ASSET ALLOCATION 2.01 976 1 1.8 2 5.2
RBC MONTHLY INCOME 1.14% 6,684 1 1.3 1 8.3
Second Category: The Bear Busters Mutual Funds
In this category, we regroup the bonds and mortgage funds that always show good return during a bear market. While the stocks are plunging, the bonds and mortgage funds are known to offer some interesting yield.
FUND MER (%) ASSETS ($M) 3YR QRT 3 YR RTRN 10YR QRT 10 YR RTRN
ALTAMIRA INCOME 1.05 243 1 4.5 2 5.4
NATIONAL BANK MORTGAGE 1.67 1,234 2 3.9 1 4.9
NB SECURE DIVERSIFIED 1.46 79 1 4.6 n/a 4.2
RBC CDN SHORT TERM INCOME 1.19 2,519 2 4.2 2 4
SCOTIA MORTGAGE INCOME 1.2 300 2 4 2 4.2
TD MORTAGE 1.73 938 1 4.6 2 4.6
TD SHORT TERM BOND 1.05 2,254 1 5 1 4.9
Third Category: The Strong Mother Ship Mutual Funds
We call them strong as they were hit by a huge storm in 2008 (they lost between 42 to 48%) but they still show very high return over the past 10 years. Those Canadian Mutual funds are known to outperform and have a solid history. No matter how strong the bear market is, they will keep their head over the water.
FUND MER (%) ASSETS ($M) 3 YR QRT 3 YR RTRN 10 YR QRT 10 YR RTRN
BMO SPECIAL EQUITY 2.37 285 1 -1.7 2 9.2
ALTAMIRA QUEBEC GROWTH 2.35 14 1 2 2 9.3
SCOTIA RESOURCE 2.33 124 2 -2 2 13.2
TD CANADIAN EQUITY 2.07 2,787 2 -3.4 1 7.1
As you can see, there are several ways to chose mutual funds in order to go through a bear market. You can pick a fun that will do good regardless of where you stand in the economic cycle, you can also decide to hide from the stock markets and refuge your investments towards mortgage and bonds funds or you can accept to live the russian roller coaster life with strong mutual funds that always show big numbers (positive or negative) but have a strong return history.
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