As you can tell, I am not a big fan of mutual funds and prefer to invest in equities, ETFs and index funds. However, I am not dogmatic in my beliefs and there are some instances in which you have to invest in mutual funds (for instance, you could have a group RRSP through your employer with a poor selection of index funds). While, picking a mutual fund that will produce decent future returns is a hazardous enterprise, many studies have shown that the two factors that correlate highly with good performance are low cost and low turnover.
With that in mind, I used the filter from GlobeFund.com to search for Canadian equity mutual funds that have a MER of 1.5% (far lower than the average Canadian fund that charges a fee of 2.6%) and added a few funds that I researched through my group RRSP plan. I further filtered out F-series funds (for which extra adviser fees are extra), funds that charge a front- or back-load, funds targeted to high net-worth individuals and index funds to come up with a very short list:
Philips, Hager and North Canadian Equity Fund – MER 1.13%
McLean Budden Canadian Equity Fund – MER 1.25%
Mawer Canadian Equity – MER 1.25%
Steady Hand Equity Fund – MER 1.35%
Leith Wheeler Canadian Equity Fund – MER 1.4%
RBC O’Shaughnessy Canadian Equity – MER 1.49%
Standard Life Canadian Dividend Growth Fund – MER 1.5%
It is amazing to note how short the list is: out of about 1000 Canadian equity funds in the GlobeFund database, only a handful charge fees a full percentage point below the average. Do you know of any other low-cost mutual fund that could be added to the list? Let me know in the comments.
