Balanced DIY mutual funds and ETFs for RRSP season
The screen
March 1 marks this year’s RRSP contribution deadline for Canadians. For seasoned investors with an established portfolio, it is a great time to rebalance the portfolio back to target weights with the help of the additional cash injection. However, for new investors, managing one’s own RRSP can prove to be a daunting task given the abundant choice of investment options available. For those who don’t have complicated financial situations or are just starting out, I’ve noted in the past that one of the best set-ups for new investors in Canada is the combination of a discount brokerage account (many of which don’t charge commissions for trading ETFs or mutual funds) and holding a balanced fund (sometimes called an “all-in-one”). Balanced funds offer the convenience of owning a single fund that will regularly rebalance itself,while providing access to a well-diversified portfolio spanning multiple asset classes and regions. Moreover, buying these products through discount brokerage channels saves you fees on advice and distribution, which over time can be significant. To help with ideas in this space, I use Morningstar Direct to screen for balanced Canadian-domiciled ETFs and DIY mutual funds that meet two criteria:
A four- or five-star Morningstar Rating for Funds, indicating that the fund has historically outperformed respective category peers after fees, on a risk-adjusted basis. Our data shows that although the star ratings are backward-looking, funds that have received five stars as a group outperform those that have received four stars, three stars, etc., in periods after receiving the rating. In other words, it’s more likely that a fund manager with a track record of outperforming peers will continue to outperform in the future, as compared with those that have historically underperformed peers.
Have received a Morningstar Quantitative Rating of gold, silver, or bronze, isolating funds that Morningstar believes will produce excess after-fee returns in the future, based on our analysis of people (quality of the management team), parent (stewardship of the fund company) and process (robustness of investment decision-making).
Source: Morningstar Direct, Data as of Feb 14, 2023
The 22 ETFs and DIY mutual funds that met the above requirements are listed in the accompanying table, alongside their fees, categories, trailing performance, ratings and inception dates. The list is sorted first on the category, which should provide an indication of what is held in the fund (noting importantly that younger investors or those with long investment time horizons can handle more equity in their portfolio), then by management expense ratio, from lowest to highest. For those that are open to a “go-anywhere” portfolio (i.e. a dynamic mix of stocks and bonds, which can change at the discretion of the portfolio manager of the fund), the last two funds on the list would provide this effect, whereas all others on the list will have a stated static mix of stocks and bonds.
This article does not constitute financial advice. Investors are encouraged to conduct their own independent research before purchasing any of the investments listed here.
Ian Tam, CFA, is director of investment research for Morningstar Canada.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.