20 Best Mutual Funds in Canada for 2021 [Updated]

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Best Mutual Funds Canada

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Mutual funds are one of the popular investment vehicles in Canada.

From money market to index funds, there are different kinds of mutual funds to choose from.

Because mutual funds are so costly compared to exchange-traded funds (ETFs), you must apply caution when investing in them.

This explains why so many Canadian investors are looking for the best mutual funds Canada to minimize risk and maximize profits.

Also, it’s important to look for the best mutual funds in Canada in the light of over 5,000 thousand mutual funds in the country.

But you don’t have to worry about that. Here I provide the top-performing mutual funds in Canada, helping you make a cost-effective decision.

What are Mutual Funds Canada?

When we talk of mutual funds in Canada, we mean funds collected from several investors to invest in bonds, stocks, or other securities.

These funds are managed by professional portfolio managers who pick and invest ⁰ in securities that match the different investment objectives and risk tolerances.

Due to the cost and weaknesses of a professional portfolio manager, most investors see ETFs and robo-advisors as cost-effective alternatives to mutual funds.

That said, there are more than 5,000 mutual funds in Canada, which makes it essential to choose only the best ones.

As you continue reading, you will learn about the best mutual funds Canada and how to choose the one that suits your needs.

A Brief History of Canadian Mutual Funds

Before we review the best mutual funds in Canada, it’s essential to understand the genesis of mutual funds in Canada.

The genesis of mutual funds in Canada can be traced to 1932, when Canadian Investment Fund Ltd was established as the first mutual fund in the country.

However, Canadians didn’t take mutual funds seriously until the early 90s, when the double-digit interest rates reduced, making investors look for higher returns.

As a result, active management, or mutual funds, was seen as the best way to “beat” the market.

Since then, mutual funds continue to grow, leading to more than 100 mutual funds management companies today.

Are Mutual Funds Safe?

Like any investment, mutual funds are not completely risk-free.

However, while mutual funds could be considered safe because they’re managed by expert portfolio managers and regulated by top bodies, the portfolio you invest in may determine the success of your investment.

Thus, you should invest only in a portfolio that meets your investment objective and risk tolerance.

As you continue reading, you will learn about the types of mutual funds and their risk levels.

Types of Mutual Funds in Canada

In order to understand the best mutual funds Canada, it’s essential to know the different types of mutual funds available.

Here are the five major types of mutual funds in Canada:

1. Money Market

This is a short-term mutual fund with higher quality and the lowest dividends.

2. Fixed-Income Funds

Fixed-income funds invest funds regularly in the portfolio using the interest earned.

3. Equity Funds

Equity funds have a high growth rate but are riskier than fixed-income funds and the money market. 

4. Balanced Funds

As the name implies, balanced funds tend to minimize risk while maximizing returns.

5. Index Funds

Index funds monitor the financial market index components using software instead of a portfolio manager. However, index funds have low returns and low risks compared to other mutual funds.

How Do I Choose a Mutual Fund in Canada?

As mentioned previously, there are more than 5,000 mutual funds in Canada. However, not all of them are right for you.

Thus, you need to choose a mutual fund that suits your investment objective and risk tolerance.

That said, when choosing the best mutual funds Canada, consider your:

1. Risk Tolerance Level

Determining your risk tolerance is the first step in finding the best investment vehicle.

Generally, more risk equals more returns in investing. On the other hand, low risk equals low returns.

2. Investment Objective

Secondly, consider your investment objective to know the mutual fund that can help you achieve your goals.

So whether you’re planning for your retirement, debt payment, home improvement etc., there’s a mutual fund that suits your needs.

3. Fund’s Volatility

A fund with a high level of volatility indicates that the investment is significantly risky. There is a high possibility of losing a lot of money if things don’t go smoothly.

Thus, a low volatile fund is ideal if you need the fund in the short term. But if you want to invest for the long time, a highly volatile fund could be perfect.

4. Fund’s Size

When it comes to the capacity to fulfill investing goals, the size of the mutual fund has little impact.

But the portfolio manager will find it more challenging to manage a large fund.

Thus, the fund’s performance may suffer as a result of having to adjust its investment methodology to meet the huge investment inflows.

5. Returns

In order to understand how a fund will do in both good and poor markets, examine its previous performance.

Although the fund’s previous performance may not offer you an exact forecast, it will give you a hint of how volatile the fund is, helping you understand how risky it is to invest in that particular fund.

6. Costs and Fees

Mutual fund firms generate money by charging fees. As mentioned earlier, the costs of mutual funds are relatively higher compared to ETFs and robo-advisors.

However, mutual funds companies don’t have the same fees. It’s essential to choose the one that has low management fees and management Expense ratio MER.

Best Performing Mutual Funds Canada

Finally, we’ve arrived at the major part of this review. Here we shall discuss the best performing mutual funds in Canada.

As you will learn shortly, the best mutual funds in Canada are split into various risk levels and markets to accommodate multiple investors.

However, we shall limit our discussion on the best conservative mutual funds, fixed income mutual funds, large market cap mutual funds, mid/small market cap mutual funds and emerging market mutual funds in Canada.

Let’s get started.

Disclaimer

The following data is valid as of the time of writing this review. You should visit the website of each mutual fund company for subsequent updates as the information is likely to change in the future.

Best Conservative Mutual Funds in Canada

Conservative mutual funds are low-risk portfolios comprising debt and equity instruments. Most conservative mutual funds allocation is on debt securities with small allocation on equity securities. 

Here are the best conservative mutual funds in Canada:

1. RBC Select Very Conservative Portfolio A

  • Net asset: $11B
  • Risk level: Conservative
  • Management fee: 1.45%
  • One-year return: 4.03%
  • Three-year return: 2.67%
  • Five-year return: 2.91%

2. RBC Select Conservative Portfolio A

  • Net asset: $24B
  • Risk level: conservative
  • Management fee: 1.59%
  • One-year return: 3.55%
  • Three-year return: 2.71%
  • Five-year return: 3.23%

3. RBC Select Balanced Portfolio

  • Net asset: $27.5B
  • Risk level: balanced
  • Management fee: 1.67%
  • One-year return: 3.22%
  • Three-year return: 3.16%
  • Five years return: 3.91%

Best Fixed Income Mutual Funds in Canada

These refer to low-risk and conservative portfolios suitable for investors looking for stable income.

Here are the best fixed-income mutual funds in Canada:

1. RBC Global Corporate Bond Fond O

  • Net asset: $11.5B
  • One-year return: 5.94%
  • Three-year return: 4.08%
  • Five-year return: 4.31%
  • Description: Global Fixed Income

2. RBC Bond Fund O

  • Net asset: $19B
  • One-year return: 8.21%
  • Three-year return: 4.71%
  • Five-year return: 4.41%
  • Description: Canada Fixed Income

3. PH&N Bond Fund O

  • Net Asset: $10B
  • One-year return: 8.35%       
  • Three-year return: 4.58%
  • Five-year return: 4.12%
  • Description: Canada Fixed Income

4. TD Canadian Bond Fund – O

  • Net asset: $13B
  • One-year return: 7.15%
  • Three-year return: 4.45%
  • Five-year return: 3.90%
  • Description: Canada Fixed Income

5. TD Canadian Core Plus Bond – O

  • Net Asset: $11.5B
  • One-year return: 6.29%
  • Three-year return: 4.09%    
  • Five-year return: 3.85%
  • Description: Canada Fixed Income

Best Large Market Cap Mutual Funds in Canada

As the name implies, large-cap mutual funds track large companies. These companies are usually profitable with excellent track records.

However, these large-cap mutual funds tend to have mid-high risk because big companies’ future potential is limited and they’re liable to fail.

Here are the best large-cap mutual funds in Canada:

1. RBC Canadian Dividend Fund A

  • Net assets: $7B
  • One-year return: -10.95%
  • Three-year return: -0.84%
  • Five-year return: 1.88%
  • Description: Canadian Equity Large Cap

2. RBC European Equity Fund O

  • Net assets: $7B
  • One-year return: 6.36%
  • Three-year return: 2.29%
  • Five-year return: 4.01%
  • Description: Europe Equity Large Cap

3. RBC Canadian Dividend Fund O

  • Net assets: $6B
  • One-year return: -9.38%
  • Three-year return: 0.90%
  • Five-year return: 3.66%
  • Description: Canadian Equity Large Cap

4. PH&N US Multi-Style All-Cap Equity Fd O

  • Net assets: $6.5B
  • One-year return: 10.48%
  • Three-year return: 9.07%
  • Five-year return: 10.3%
  • Description: US Equity Large Cap Blend

5. Mawer International Equity Series O

  • Net assets: $5.5B
  • One-year return: 5.89%
  • Three-year return: 4.82%
  • Description: Global Equity Large Cap

Best Mid/Small Market Cap Mutual funds in Canada

Mid/small-cap mutual funds refer to funds invested in companies that are not yet established.

However, while these funds have high growth potential, your risk tolerance level must be high to be comfortable with them.

Here are the best mid/small-cap mutual funds in Canada:

1. EdgePoint Global Portfolio Series A

  • Net assets: $2.5B
  • One-year return: -11.79%
  • Three-year return: -0.11%
  • Five-year return: 3.64%
  • Description: Global Equity Mid/Small Cap

2. EdgePoint Global Portfolio Series F

  • Net assets: $3B
  • One-year return: -10.78%
  • Three-year return: 1.03%
  • Five-year return: 4.83%
  • Description: Global Equity Mid/Small Cap

3. Mackenzie US Mid Cap Growth Cl F

  • Net assets: $1B 
  • One-year return: 1.59%
  • Three-year return: 9.27%
  • Five-year return: 10.60%
  • Description: US Equity Mid Cap

4. Mawer Global Small Cap Series O

  • Net assets: $2B
  • One-year return: 8.96%
  • Three-year return: 9.90%
  • Five-year return: 11.07%
  • Description: Global Equity Mid/Small Cap

Best Emerging Market Mutual Funds

Due to the fact that they invest in developing countries such as China, Russia, Brazil and India, emerging market mutual funds tend to have greater returns and high risk.

That said, the following are the best emerging market mutual funds in Canada.

1. RBC Emerging Markets Equity Fund

  • Net assets: $4B
  • One-year return: -3.82%
  • Three-year return: 2.09%
  • Five-year return: 5.08%
  • Description: Global Emerging Markets Equity

2. Fidelity Emerging Markets Portfolio Sr O

  • Net assets: $2B
  • One-year return: 5.54%
  • Three-year return: 6%
  • Five-year return: 7.93%
  • Description: Global Emerging Markets Equity

3. BlueBay Emerging Markets Corp Bd O

  • Net assets: $1.5B
  • One-year return: 5.66%
  • Three-year return: 4.47%
  • Five-year return: 6.76%
  • Description: Emerging Market Fixed Income

How to Invest in Mutual Funds Canada

After identifying the mutual fund that matches your investment objective and risk tolerance, the next step is to invest in that fund.

Thus, here are the simple steps on how to buy mutual funds in Canada:

  1. Allocate your funds to the various assets your want to invest in. A balanced mutual fund portfolio consists of debt and equity securities.
  2. Visit the site of the mutual fund company you want to invest in and initiate your application (offline or online).
  3. Diversify and follow up on your portfolio after registration to stay on top of your investment.

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Verdict on the Best Mutual Funds Canada 2021

What are the best mutual funds to invest in Canada? That’s for you to decide. I have done my job of identifying the best mutual funds Canada 2021 for you.

However, you shouldn’t rush into selecting any of the above mutual funds without considering your risk tolerance and investment objective.

But if you’re looking for an alternative investment vehicle, I will suggest ETFs since they’re low-cost and flexible than mutual funds.

Overall, you should invest in a portfolio that will not ruin your current and future standard of living.

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FAQs on Top Mutual Funds Canada

How Many Mutual Funds in Canada?

There are more than 5,000 mutual funds in Canada offered by more than 100 companies.

Are Mutual Funds a Good Investment Canada?

Like any investment vehicle, mutual funds are a good investment in Canada. However, they are more costly than ETFs and can ruin your investment if you pick the wrong portfolio or when wrongly managed by a portfolio manager.

Will I Lose Money in Mutual Funds?

Yes and no. Like other investments, you can lose money in a mutual fund that doesn’t match your investment objective and risk tolerance or when a portfolio manager mismanaged your investment. 

On the other hand, you may earn high returns when you choose the perfect portfolio handled by an expert portfolio manager.

Should I Invest in Mutual Funds When the Market is High?

You may lose great opportunities when you invest in mutual funds only when the market is high.

Finally, if you have more questions about the top mutual funds in Canada, let me know in the comment section.

Buy Mutual Funds From Questrade
Best Mutual Funds Canada

Product Name: Questrade

Product Description: Fund and Buy the best performing mutual funds in Canada from Questrade Portfolio. Click on the button below to sign up and get exclusive discounts offers.

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