We tend to think lots of choice is a good thing. But when it comes to mutual funds, a list of several thousand products can be daunting. We all know chasing last year’s winners is not the answer and that a good mutual fund strikes a balance between strong expected returns, appropriate risk and low cost. However, finding such funds is easier said than done.
That’s where the MoneySense mutual fund Honour Roll featuring more than 40 picks comes in handy. Each year, we provide you with compelling evidence that our selections continue to beat the average mutual fund by a good margin. We don’t guarantee all Honour Roll funds will outperform, for nobody wins all the time. However, our methodology can improve your decisions and maximize your chances of success. “An honourable track record,” below, shows the percentage of picks that went on to outperform over the following five years.
This year’s selection is a bit different from past Honour Rolls in that we’ve restricted it to four equity categories. The deadly combination of low interest rates and high fees has taken away the ability of most bond funds and balanced funds to deliver the added value you expect. This is why I suggest you avoid actively managed bond funds and balanced funds altogether. Instead, here’s what I suggest: after determining your target asset allocation (alone or with the help of your financial adviser), invest the fixed-income component of your portfolio in a cheap bond ETF. For suggestions see The MoneySense ETF All-Stars. Then you can populate the equity component of the portfolio with a mix of low-cost index funds, ETFs and Honour Roll funds.
This year’s winners include funds by RBC, Fidelity, Beutel Goodman and more.
Pick up the February/March issue of MoneySense on newsstands now through to March 31st to see this year’s top picks.
While investors fret about the “lost decade” in stocks, things are looking up. The MoneySense Honour Roll funds show that well-chosen equity funds provide a good trade-off of risk and return.
An Honourable Track Record
Percentage of our picks that went on to outperform their category over five years: