How Do Funds From the Big 3 Compare?

Canadian retail banks manage much of our money - do they do it well? Explore with Morningstar's Danielle LeClair.

Danielle LeClair 6 April, 2023 | 4:26AM
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Danielle LeClair: According to Morningstar's data, bank-owned fund companies manage over 35% of mutual fund and ETF assets in Canada. This is not surprising since these companies benefit from the resources and reputations of their banks.

Despite perceived similarities, not all bank-owned fund companies are alike. We recently completed our parent assessments of the Big 3. So, how did they compare? Let's take a look.

BMO Global Asset Management earns the lowest parent rating of the three at average. It's been growing rapidly, hiring more than 70 investment professionals in two years. This is because it changed its business model from one with a global presence to one exclusively focused on Canada. Canadian investors stand to benefit from this, but the firm does need some time to settle in.

TD Asset Management earned an above-average rating for its clear, established, investor-focused identity. It offers a wide range of mutual funds and ETFs that highlight the team's key strengths. Importantly, it does not offer trendy products that might not work for investors in the long term. There's been some turnover among leaders, but it refilled those positions internally, so there's continuity.

Finally, RBC Global Asset Management also earned an above-average parent rating. It is the largest of the three and is well-known for its high-performing mutual funds and ETFs. It has a strategic alliance with BlackRock that gives Canadians access to the iShares suite of ETFs. Unlike BMO and TD, RBC Global Asset Management has a star manager system which can lead to bumpy transitions when investment team members change.

Overall, Canadian investors are in great hands with these managers, but there are nuances to consider when selecting which one is the right fit for you.

For Morningstar, I'm Danielle LeClair.

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Danielle LeClair  Danielle LeClair is Director of Manager Research for Morningstar Canada

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