Saxon scores as a top Canadian fund performer

swon@globeandmail.com

What are we looking for?

The 15 top performers among pure Canadian stock mutual funds over the past decade.

The search

We screened funds in the Canadian equity category, which must invest 90 per cent of the stock holdings in larger-cap Canadian companies. (They differ from the Canadian focused-equity category, which can invest up to 50 per cent in foreign stocks.) U.S.-dollar, segregated, pooled and duplicate versions of the fund were excluded.

What did we find?

Many of the leading funds are run by Canadian firms focused on pension and high-net-worth investors.

It's not too surprising to see them do well, given that the Canadian stock market is their bread and butter, as opposed to foreign equities. Mutual funds have traditionally been a sideline business, but that is changing as some of these firms are acquired by fund giants.

Their strong track record has been helped by lower fees because these funds are mostly sold directly to investors or through discount brokers. And they typically require a higher minimum, ranging in many cases from $5,000 to $10,000. But, as these firms are acquired or partner with fund companies, the same investments are being sold through advisers with higher fees.

Mackenzie Saxon Stock fund (front-end-load version) emerged at the top over 10 years with an annualized return of 8.6 per cent. It is part of the Saxon-branded funds acquired in 2008 by Mackenzie Financial Corp. Rick Howson was lead manager of the value-oriented fund for most of the fund's history, but since last fall it has been run by a team led by Suzann Pennington. The Saxon Stock fund version sold by advisers, however, has a higher management expense ratio of 2.38 per cent so that will cut into future returns.

Beutel Goodman Canadian Equity and Mawer Canadian Equity, respectively, posted annualized returns of 7.9 per cent and 7.7 per cent. Lower MERs helped the performance of these funds.

***