Mutual funds that rise to top of RESP class
INVESTMENT FUNDS REPORTER
As the cost of post-secondary schooling continues to skyrocket, it is never too early or too late to start building an educational net egg.
It's not uncommon now for a student to spend $15,000 to $20,000 a year to attend university away from home. With a registered education savings plan (RESP), parents can soften the financial blow because children can be eligible for various government grants, while savings can grow tax-free until withdrawn.
Keep in mind that the monies should be shifted into ultra-conservative investments such as a guaranteed investment certificate (GIC) or a bond fund within two or three years of tapping into the cash. While there are different ways to invest in an RESP, we asked several experts to recommend conservative and aggressive mutual funds for a diversified portfolio.
James Gauthier, vice-president of investment funds, DundeeWealth Inc.
Manulife Monthly High Income (conservative)
The Canadian neutral balanced fund overseen by manager Alan Wicks of Manulife Asset Management Ltd. has about 30 per cent in investment-grade bonds and the rest in higher-yielding equities. The fund also provides a monthly distribution of 6 cents, so its yield is roughly 5 per cent, Mr. Gauthier said.
Trimark Global Endeavour (aggressive)
The global small-to-mid-cap equity fund run by Jeff Hyrich of Invesco Canada Ltd. owns "an eclectic mix of top-notch businesses," he said. "It has been a first-quartile fund over two and three years to June 30." It is half invested in consumer discretionary names, and hedges part of the foreign-currency exposure.
Dave Paterson, fund analyst, D.A. Paterson & Associates Inc.
CI Signature High Income Fund (conservative)
The global neutral balanced fund run by a team at CI Investments Inc. invests in high-yielding equities and corporate bonds. It has consistently finished in the first quartile except for 2008, when it was hit with 21-per-cent loss, he said. "It pays a monthly distribution of 7 cents per unit."
Fidelity Canadian Large-Cap B (aggressive)
The Canadian focused equity fund has been managed since 2011 by Daniel Dupont of Fidelity Investments Canada, after former manager Brandon Snow joined CI Investments Inc. The value-oriented fund, which is 44 per cent invested outside of Canada, focuses on capital protection, Mr. Paterson said.
Nick Dedes, analyst at Morningstar Canada
Beutel Goodman Balanced (conservative)
The Canadian equity balanced fund, run by a team at Beutel Goodman & Co., owns large-cap value stocks and high-quality bonds. The group's investment discipline has come through during "tough market stretches," while a "low fee also gives it an instant leg-up over many of its peers," said Mr. Dedes.
Fiera Sceptre Equity Growth (aggressive)
The Canadian small-to-mid-cap equity fund has been run since 2008 by Michael Chan of Fiera Capital Corp. He built a strong track record at UBS Global Asset Management, and has done well "navigating through the market turmoil," Mr. Dedes said. "The fund is also well-priced relative to its peers."
Gordon Pape, author of personal finance books and mutual fund guides
TD Monthly Income (conservative)
The Canadian equity balanced fund overseen by manager Doug Warwick of TD Asset Management Inc. since 1998 is about 57-per-cent invested in a "good mix of blue-chip stocks," and the rest mostly in bonds, Mr. Pape said. "The top five holdings are banks, and it also has some real estate investments trusts."
Dynamic Small Business (aggressive)
The Canadian small-to-mid-cap equity fund, which has been overseen by Oscar Belaiche of GCIC Ltd. for the past decade, also invests in real estate investment trusts and recently held 25 per cent in cash. The manager "has shown terrific stock-picking ability," said Mr. Pape. He would pair this fund with Fidelity Canadian Large Cap "to give exposure to both sides of the marketplace."
Wednesday: Top ETF picks for an RESP
TOP MUTUAL FUND PICKS FOR AN RESP
FUND / CATEGORY / MER / ASSETS ($ mil.)* / 1 YEAR** / 3 YEARS / 5 YEARS / 10 YEARS / MIN. INVEST.
Beutel Goodman Balanced-D / Cdn. Equity Bal. / 1.24 / $2,142.2 / 0.19% / 6.24% / 2.17% / 5.37% / $5,000
CI Signature High Income / Global Neutral Bal. / 1.06 / 3,605.5 / 5.40 / 13.91 / 4.59 / 9.11 / 500
Manulife Monthly High Income Fund / Cdn. Neutral Bal. / 2.18 / 5,313.4 / 2.75 / 7.87 / 1.63 / 7.12 / 500
TD Monthly Income / Cdn. Equity Bal. / 1.48 / 5,900.0 / 2.05 / 9.39 / 2.94 / 8.27 / 100
Dynamic Small Business / Cdn. Small/Mid Cap Eq. / 2.77 / 620.0 / 2.33 / 19.72 / 8.89 / 15.43 / 500
Fidelity Canadian Large Cap-B / Cdn. Focused Eq. / 2.28 / 459.9 / 7.00 / 15.53 / 6.18 / 9.68 / 500
Fiera Sceptre Equity Growth Cls B / Cdn. Small/ Mid Cap. Eq. / 1.74 / 331.3 / -13.95 / 15.25 / -4.09 / 12.00 / 5,000
Trimark Global Endeavour / Global Small/Mid Cap Eq. / 2.69 / 579.8 / -1.38 / 14.23 / -2.43 / 4.52 / 500
*As of May 31, 2012
**To June 30, 2012
THE GLOBE AND MAIL / SOURCE: LIPPER