The best mutual funds for retirement

These funds are gold-rated, and have either four or five stars

Ian Tam, CFA 21 February, 2020 | 12:45AM
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Earlier this week, I outlined the idea that choosing the asset classes in which to invest within your tax sheltered RRSP or TFSA is arguably more important than selecting the investment itself. As tax shelters are by nature designed to benefit you in retirement, having an idea of when you want to retire will inherently allow you to budget your ‘risk’ accordingly. The closer you are to retirement, the less risk you can afford to take (see prior article on human capital vs. financial capital).

Stressing this concept, here are some of the best rated mutual funds available to retail investors in Canada based on some of the most popular mutual fund categories. To find these funds, I scoured Morningstar’s Canadian mutual fund base and looked specifically at funds with a combination of great historical performance (by looking for Star Ratings of four or five stars), and assessed with the potential to outperform others in the category on a forward looking basis (by looking for a Morningstar Quantitative Rating of Bronze, Silver, or Gold).

Important Note: Many of the funds listed here are F class funds, typically made available through fee-based advisors whose advice is also paid for via an overall management fee on your account (separate from the MERs listed below). The advice, planning, and financial coaching from a trusted advisor is a worthwhile tool in your toolbelt and not something that should be overlooked. In fact, Morningstar has quantified the value of this advice through a term we call “Gamma”. This is a great list of mutual funds as a starting point for research but does not constitute financial advice. It is always recommended to speak to an advisor or investment professional before investing.

Dividend & Income Equity 
The funds in this category invest in dividend-paying securities which continues to be a popular style of investment in Canada. To qualify, funds most hold at least 70% in domestic Canadian equities.

Name MQR Morningstar Star Rating Total YTD Return 1-yr Returns 3-yr Returns 5-yr Returns MER
Sun Life Dynamic Equity Income F Gold 5 Stars 1.71 16.58 10.02 9.20 1.05
RBC Canadian Equity Income F Gold 5 Stars 1.56 14.71 7.70 7.02 0.76
RBC Canadian Dividend Class F Gold 4 Stars 1.97 13.44 7.01 7.23 0.78
Dynamic Dividend Gold 5 Stars 1.70 15.08 8.69 8.10 1.60

Morningstar Direct Data as of Dec 31, 2019

The funds in this category must invest 90% in Canadian equities that are generally larger in size.

Name MQR Morningstar Star Rating Total YTD Return 1-yr Returns 3-yr Returns 5-yr Returns MER
RBC QUBE Low Vol Canadian Eqty Fund F Gold 5 Stars 2.23 16.73 7.85 7.42 0.77
Mawer Canadian Equity A Gold 4 Stars 2.11 14.98 6.36 6.95 1.17
Manulife Cdn Investment Class F Gold 4 Stars 2.12 15.21 6.58 7.20 1.24
Counsel Canadian Value Sr I Gold 4 Stars 0.51 10.93 5.88 6.46 0.17

Morningstar Direct Data as of Dec 31, 2019

Neutral Balanced
Funds in this category must invest at least 70% of total assets in a combination of equity securities domiciled in Canada and Canadian dollar-denominated fixed income securities.

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About Author

Ian Tam, CFA  is Director of Investment Research at Morningstar Canada. 


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