Are you looking for the best mutual funds in Canada? If so, you’ve come to the right place. This blog post will discuss the top Canadian mutual funds based on their returns over the past decade. So, if you’re looking to invest your money and want to know which funds are worth considering, keep reading!
Mutual funds are one of the popular investment vehicles in Canada. Different mutual funds exist – money markets, index funds, etc.
What are mutual funds?
Mutual funds are an investment vehicle that pools money from many investors to purchase a portfolio of stocks, bonds, or other securities. Mutual funds allow small investors access professionally managed portfolios of equities, bonds and other securities. Investors in a mutual fund own shares representing a portion of the fund’s assets.
The fund is managed by professional money managers, who invest in various securities to generate returns for shareholders and provide diversification. The funds are typically registered with the Securities and Exchange Commission (SEC) and must comply with federal regulations designed to protect investors.
Mutual funds offer the potential for higher returns than individual stocks while mitigating risk through diversification. Investors can choose from various mutual funds, each with a different set of risk and return characteristics. Mutual funds are one of the most popular investments for retirement planning, college savings and other long-term financial goals for Canadians.
Canadians can purchase mutual fund shares through a broker or financial advisor directly from the fund company or via Robo-advisors. Most investors buy and sell shares at the fund’s net asset value (NAV), which is determined by dividing the total market value of the fund’s assets by the number of outstanding shares.
When buying and selling mutual funds, investors are typically charged a sales commission or load, which is paid to the broker or financial advisor for his or her services in selecting and monitoring the fund.
Some funds also charge an annual management fee, which helps cover the fund’s costs. Fees and expenses associated with mutual funds should be carefully considered when selecting a fund.
Mutual funds can offer Canadians several benefits, including diversification, cost efficiency, liquidity and professional management. Professional portfolio managers monitor the fund’s performance, allowing investors to benefit from their expertise without picking stocks independently.
Mutual funds also offer the diversification, which helps reduce risk by spreading investments across different securities and asset classes. Also, mutual funds are typically more affordable than individual stocks and bonds, making them a popular investment vehicle for Canadians.
Types of mutual funds in Canada
Mutual funds in Canada come in various types, each with its distinct advantages and disadvantages. The most common types of mutual funds offered in Canada are:
- Equity Funds: These funds invest primarily in stocks listed on Canadian exchanges, such as the Toronto Stock Exchange (TSX). Equity funds can have varying levels of risk depending on the stocks in which they invest.
- Fixed Income Funds: These funds primarily focus on investments in bonds, such as government and corporate bonds. Generally, fixed-income funds have a lower risk than equity funds since bond prices do not fluctuate much over time.
- Balanced Funds: Balanced funds combine equity and fixed-income investments, allowing investors to benefit from both types of assets. Generally, these funds have moderate risk due to the diversification they provide.
- Money Market Funds: These funds focus on short-term investments with very low levels of risk, such as deposits in banks or other financial institutions. Money market funds are generally considered safe investments and have very low returns.
- Exchange-Traded Funds (ETFs) are funds traded on stock exchanges, such as the TSX. These funds generally track an index, such as the S&P/TSX Composite Index, or a market sector, like technology stocks. ETFs are an easy way for investors to gain exposure to various stocks without purchasing each stock individually.
- Targeted Funds: These funds, also known as speciality funds, invest in specific sectors or regions of the market. For example, a technology fund will focus on investing in technology companies, while a regional fund may focus on investing in companies located in a specific region. Targeted funds can be more volatile than other types of mutual funds and therefore have higher levels of risk.
- Index Funds: These funds are designed to track the performance of a particular index, such as the S&P/TSX Composite Index. The goal is to replicate the index’s performance as closely as possible. Generally, index funds have lower management fees than other types of mutual funds and have relatively low levels of risk.
- Hedge Funds: These funds invest in various asset classes, such as stocks, bonds, and commodities, to generate higher returns than traditional investments. The strategies employed by these funds can be complex, and the fees charged are generally higher than other types of mutual funds. Hedge funds also have a higher level of risk due to their strategies and the use of leverage.
No matter what type of mutual fund you choose, it’s important to understand the risks associated with each type before investing. It’s also important to consider your goals and financial situation when selecting mutual funds in Canada. By taking the time to research and understand different types of mutual funds, you can ensure that you invest wisely for your future.
Best mutual funds in 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, the best mutual funds in Canada are split into various risk levels and markets to accommodate multiple investors.
However, we shall limit our discussion to 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.
Best conservative mutual funds in Canada
Conservative mutual funds are low-risk portfolios comprising debt and equity instruments. The most conservative mutual funds allocation is on debt securities, with a small allocation on equity securities. Here are the best conservative mutual funds in Canada:
Fund Name | Net Asset | Risk Level | Management Fee | One-Year Return | Three-Year Return | Five-Year Return |
RBC Select Very Conservative Portfolio A | $11 Billion | Conservative | 1.45% | 4.03% | 2.67% | 2.91% |
RBC Select Conservative Portfolio A | $24 Billion | Conservative | 1.59% | 3.55% | 2.71% | 3.23% |
RBC Select Balanced Portfolio | $27.4 Billion | Conservative | 1.67% | 3.22% | 3.16% | 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:
Fund Name | Net Asset | Risk Level | One-Year Return | Three-Year Return | Five-Year Return |
RBC Global Corporate Bond Fond Series O | $11.5 Billion | Conservative | 5.94% | 4.08% | 4.31% |
RBC Bond Fund Series O | $19 Billion | Conservative | 8.21% | 4.711% | 4.41% |
PH&N Bond Fund Series O | $10 Billion | Conservative | 8.35% | 4.58% | 4.12% |
TD Canadian Bond Fund Series O | $13 Billion | Conservative | 7.15% | 4.45% | 3.90% |
TD Canadian Core Plus Bond Series O | $11.5 Billion | Conservative | 6.29% | 4.09% | 3.85% |
Best marge 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:
Fund Name | Net Asset | One-Year Return | Three-Year Return | Five-Year Return |
RBC Canadian Dividend Fund Series A | $7 Billion | 10.95% | -0.84% | 1.88% |
RBC European Equity Fund Series O | $7 Billion | 6.36% | 2.29% | 4.01% |
RBC Canadian Dividend Fund Series O | $6 Billion | -9.38% | 0.90% | 3.66% |
PH&N US Multi-Style All-Cap Equity Fd Series O | $6.5 Billion | 10.48% | 9.07% | 10.30% |
Mawer International Equity Series O | $5.5 Billion | 5.89% | 4.82% | N/A |
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.
Fund Name | Net Asset | One-Year Return | Three-Year Return | Five-Year Return |
EdgePoint Global Portfolio Series A | $2.5 Billion | -11.79% | -0.11% | 3.64% |
EdgePoint Global Portfolio Series F | $3 Billion | -10.78% | 1.03% | 4.83% |
Mackenzie US Mid Cap Growth Cl F | $1 Billion | 1.59% | 9.27% | 10.60% |
Mawer Global Small Cap Series O | $2 Billion | 8.96% | 9.90% | 11.07% |
Best Canadian emerging market mutual funds
Because 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.
Fund Name | Net Asset | One-Year Return | Three-Year Return | Five-Year Return |
RBC Emerging Markets Equity Fund | $4 Billion | -3.82% | 2.09% | 5.08% |
Fidelity Emerging Markets Portfolio Sr O | $2 Billion | 5.54% | 6.00% | 7.93% |
BlueBay Emerging Markets Corp Bd O | $1.5 Billion | 5.66% | 4.47% | 6.76% |
Why Canadian mutual funds are popular
Canadian mutual funds have become increasingly popular with investors in recent years, and with good reason. Mutual funds in Canada stand out due to their diverse basket of assets, allowing investors to spread risk across various sectors while still participating in the potential gains of the stock market.
This has been a key factor in their success, as evidenced by their strong performance over the past decade. They have also benefited from favourable economic conditions, including growing GDPs and low inflation rates, which have helped buoy stock prices.
Investing in Canadian mutual funds is also relatively secure compared to other forms of market investing since they are managed by experienced portfolio managers who closely monitor performance and react quickly to changes.
Going forward, mutual funds in Canada remain attractive for investors looking for diversified portfolios with reliable returns. However, it’s important for them to be aware that factors like market volatility could affect returns going forward. Ultimately, however, mutual funds are likely to continue providing a great opportunity for long-term growth.
Why these mutual funds have done so well, and what can investors expect from them in the future
Mutual funds have become increasingly popular with investors in recent years, and with good reason.
Mutual funds stand out due to their diverse basket of assets, allowing investors to spread risk across various sectors while still participating in the potential gains of the stock market. This has been a key factor in their success, as evidenced by their strong performance over the past decade.
They have also benefited from favourable economic conditions, including growing GDPs and low inflation rates, which have helped buoy stock prices. Investing in mutual funds is also relatively secure compared to other forms of market investing since they are managed by experienced portfolio managers who closely monitor performance and react quickly to changes.
Going forward, mutual funds remain attractive for investors looking for diversified portfolios with reliable returns. However, it’s important for them to be aware that factors like market volatility could affect returns going forward.
Ultimately, however, mutual funds are likely to continue providing a great opportunity for long-term growth.
Pros and cons of investing in mutual Funds
Mutual funds are an attractive investment option for many people because of their potential to deliver steady returns and easy diversification.
Once you have identified the best strategy for your financial objectives, mutual funds can be a convenient and cost-effective way to gain exposure to various markets.
The pooling of assets means you can invest smaller amounts than you would need to purchase individual stocks, and professional fund managers are adept at balancing risk with potential rewards.
However, it’s also important to bear in mind the disadvantages of investing in mutual funds. Management fees can erode returns significantly, and there’s always the risk that you may end up with unprofitable investments due to market changes or other factors beyond your control. Therefore, a thorough analysis of all associated costs is necessary before committing any funds.
In summary, while there are pros and cons associated with investing in mutual funds, they can still be an effective way of gaining diversified access to growth opportunities at a fraction of the cost compared to an individual stock portfolio.
Consider your personal goals carefully before making any decisions so that you can arrive at a suitable investment plan tailored towards achieving them.
Are mutual funds safe?
Mutual funds are generally considered safe investments for long-term growth and stability. As with any financial instrument, there is always some degree of risk involved; however, the risk associated with mutual funds is relatively low compared to other, more high-risk investments.
When it comes to Canadian mutual funds, in particular, investors can rest assured that their investments are well-regulated and managed by professionals with experience in the financial markets.
This means investors can trust that their money is in safe hands when investing in these funds, providing peace of mind as they build a solid portfolio for the future.
How to choose a mutual fund in Canada?
When choosing the best mutual funds in Canada, there are several factors to consider. The first is your investment goals, which will determine the type of fund you should invest in.
For example, an equity fund may be a suitable option if your goal is long-term growth. A fixed-income fund could be a good choice if you’re looking for income and stability.
You should also consider the fees associated with each fund, the fund manager’s track record and the fund’s investment strategy.
- 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.
- 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.
- 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.
- Fund Size: The mutual fund size has little impact on the capacity to fulfil investing goals. Thus, the fund’s performance may suffer due to adjusting its investment methodology to meet the huge investment inflows.
- Returns: Examine its previous performance to understand how a fund will do in good and poor markets. Although the fund’s previous performance may not offer you an exact forecast, it will hint at how volatile it is, helping you understand how risky it is to invest in that particular fund.
- 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. Choosing the one with low management fees and management Expense ratio MER is essential.
Additionally, it’s important to read through the prospectus carefully to ensure you understand all the risks involved with investing in that particular fund. Finally, you should consider any tax implications of investing in a particular fund.
Considering all these factors, you can ensure that you are selecting the best mutual funds in Canada for your individual goals and financial situation. Investing wisely today will help secure your future financial well-being.
How to invest in Canadian mutual funds?
Once you’ve chosen the best mutual funds in Canada for your individual goals and financial situation, you’ll need to decide how to invest in them. Depending on the type of fund you have chosen, there are a few different ways to do this.
If you’ve selected an actively managed fund, such as a hedge fund or target fund, you can work with an investment advisor who can provide personalized advice to help you make the most of your investments. If you’ve chosen a passive fund, such as an index fund or ETF, you can open an account with a discount broker and buy shares in the fund directly.
You should also consider the fees associated with each type of investment vehicle and any tax implications. It’s important to understand all the associated risks before investing.
By taking the time to research, understand, and consider all these factors, you can make sure that you are making the best decisions regarding investing in mutual funds in Canada. Doing so will help ensure your financial security and success in the long run.
Verdict on the best mutual funds in Canada
As an investor, it’s important to make well-informed decisions about where to put your money. Relying on the advice of brokers and friends might be tempting, but this can quickly result in missed opportunities or costly mistakes.
Doing your research beforehand is essential for making successful investments that will help maximize returns. Whether a first-time investor or an experienced trader, conducting thorough research will give you the insight and confidence to decide where best to commit your funds.
Begin by familiarizing yourself with the types of investments available and what you could gain from each. Consider how long you want to invest and factor in any associated risks beforehand. It’s also important to keep abreast of current news and announcements that may affect certain markets or securities; these events often directly impact prices and the performance of certain investments.
By taking the time to research potential investments before making any commitments, you can help ensure that your financial future remains secure.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
The primary purpose of Money Reverie is to help everyday Canadians make better financial decisions by providing up-to-date financial news and information, reports, product reviews, and government programs.
