Earlier this month, we discussed five small and mid-cap global equity funds that are likely to outperform. This week, we take a look at funds in the Canadian equity balanced universe.
Funds in this category invest in a mix of equity and fixed income securities. The funds have to invest greater than 60%, but less than 90%, of their total assets in equities.
There are a total of 555 funds in the Canadian equity balanced fund category, of which 167 are medalist funds, or funds that have a rating of Gold, Silver or Bronze. The forward-looking rating picks funds that are likely to outperform in the future, based on various metrics including price, portfolio and performance.
Of these medalist funds, we look at five that have four or five star ratings. The star rating is a data-driven rating that measures how well a fund has performed in the past, compared with similar funds.
Here is a list of five funds that have performed well in the past, and have a potential to perform well in the future as well:
| Name | Morningstar Rating | Quantitative Rating |
10-Year Total Return |
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| Mackenzie Canadian Growth Balanced | 5 | Silver | 8.79 | |
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| NBI Jarislowsky Fraser Select Bal F | 4 | Silver | ||
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| TD Dividend Income - F | 5 | Silver | 9.39 | |
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| Axiom Balanced Growth Portfolio Class F | 4 | Silver | 7.29 | |
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| Manulife Fundamental Balanced Class F | 5 | Gold | ||
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| Source: Morningstar. Data as of Dec. 12, 2018 | ||||
Manulife Fundamental Balanced Class F
Manulife Fundamental Balanced Class F is the only five-star fund with a Gold rating on the list. The fund has close to 70% of its holdings in equity, around 15% in bonds, and a little over 15% in cash. Its cash holdings are significantly above the category average of 6.9%. On the equity side, the fund is overweight is category in healthcare, technology and communication. On the bond side, the fund has a little over 65% of its holdings in Canadian bonds, as against a category average of over 91%. But it is overweight its category on U.S. Bonds, with close to 32% of its bond holdings in the region, as against a category average of close to 7%. The fund has a standard deviation of 5.1% over five years, below the category average of 6.04%, while its returns over the same period were 7.17%, above the category average returns of a little over 4%.
Axiom Balanced Growth Portfolio Class F
Axiom Balanced Growth Portfolio Class F is a four-star, Silver-rated fund. It has an asset allocation of 63.45% of its holdings in stocks, 32.53% in bonds, and 3.33% in cash. Its cash holdings are less than half the category average of 6.9%. On the equity side, overweight its category in consumer cyclicals, energy, and industrials. It is underweight its category on financial services, communication services and consumer defensives. Its bond holdings are 70.62% in Canadian bonds, as against the category average of 91%. It is overweight the category in U.S. bonds, U.K. bonds, European bonds, Japanese bonds, and Australian bonds. The fund has a slightly lower standard deviation as compared to its category, and has delivered slighter higher returns over 10 years. It also has a higher Sharpe ratio, meaning it has a better historical risk-adjusted performance.
TD Dividend Income – F is a five-star, Silver-rated fund. This fund is the cheapest on the list, with expenses of 0.84%. It also is the largest, with a portfolio size of $4.1 billion. The fund is underweight its category on cash, with cash holdings of 0.67%. It holds 75.25% of its portfolio in equity, and 17% in bonds. Of its equity holdings, over 55% are in financial services stocks, as against a category average of around 32%. It has no holdings in healthcare stocks or technology stocks, unlike other peers. On the bond side, it is slightly underweight Canadian bonds, and slightly overweight on U.S. bonds. This fund is slightly riskier than the others on this list, with a standard deviation of 8.02% over 10 years, as against a category average of 7.27%. However, for the same period, it has also delivered returns of 9.39%, as against a category average of a little under 7%.
NBI Jarislowsky Fraser Select Bal F
NBI Jarislowsky Fraser Select Bal F is a four-star, Silver rated fund. The fund has a slightly lower than category allocation to equities, and a higher allocation to bonds, with close to 35% of its portfolio in bonds, as against a category average of a little over 24%. Its equity portfolio is underweight on basic materials, financial services and energy. It has no holdings in utilities or real estate. The fund is overweight on consumer cyclicals, industrials, technology and consumer defensives. Its bond holdings are in Canada, the U.S. and the U.K. The fund has a lower than average standard deviation over five years and has delivered higher than average returns.
Mackenzie Canadian Growth Balanced F
Mackenzie Canadian Growth Balanced F is a five star, Silver-rated fund. The fund holds a little under 9% of its $2.3 billion assets in cash. It has close to 62% in equities, and another 30% in bonds. Of its equity portfolio, 21% is in financial services, as against a category average allocation to financial services of 31.5%. It is also underweight on energy and basic materials. The fund is overweight on consumer cyclicals, industrials and healthcare. It has over 19% allocation to healthcare, as against a category average of 5.4%. Its bond portfolio is mainly in Canada, the U.S. and the U.K, though it has some allocation to bonds in Bermuda, the Bahamas and Mexico, among others.
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