Along with the major fund companies, Canada's banks and trust companies are pulling in fat profits from their mutual fund operations - a key reason why the combined earnings of the Big Six banks hit a record $6.3 billion in the 1996 fiscal year. The exploding popularity of fund investing is certainly a boon to the financial services industry. "The perception is that the government is not going to take care of us in our old age, so we'd better take care of ourselves." She believes that fund sales will continue to swell over the next two decades as anxious baby boomers shift away from consumption in order to stash money into their RRSPs for retirement. "It's huge - unprecedented," says Sherry Cooper, chief economist for Nesbitt Burns Inc., a Toronto-based brokerage. Industry players expect the total to hit $250 billion by the end of the current RRSP season and $600 billion by the year 2000. During 1996, the total amount invested in Canadian stock funds - currently the hottest fund category - soared a whopping 62 per cent to $58.2 billion.Ĭounting mutual funds of all types, investors had a record $211.8 billion socked away by the end of 1996, 45 per cent more than at the beginning of the year and five times as much as at the start of the decade. Indeed, some fund managers can scarcely keep up with the tide of money washing into their accounts. With mutual fund assets growing at a breakneck pace, the need for such information has never been greater.
BEST PERFORMING MUTUAL FUNDS CANADA HOW TO
In addition, an investment roundtable offers advice from the experts on how to avoid some of the most common mistakes committed by mutual fund buyers. Also featured are the results of an exclusive cross-Canada poll of investors conducted for Maclean's by Marketing Solutions, a financial services consulting company. The package includes rankings of the best and worst funds in six major fund categories based on returns over three and five years, as calculated by BellCharts Inc., an independent Toronto-based company that analyzes fund performance. Such hazards, and how to avoid them, are the basis of this 16-page report on mutual funds. The sector managed a modest improvement in 1996, but investors who jumped in three years ago are still showing a loss. Hoping to achieve similar returns, thousands of RRSP holders across the country pulled money out of GICs and stashed it into emerging-market funds - only to see the value of their investments plummet 9.5 per cent by the end of 1994 and another 12.4 per cent in 1995. Consider what happened in early 1994, when funds that invest in Latin America and other so-called "emerging markets" were boasting average year-over-year gains of 70.2 per cent. But savvy investors know that in the markets, big returns often go hand in hand with big risks. That, of course, is the pitch many mutual fund investors want to hear - and one the financial services industry is only too happy to pump out. A few more years of stellar results like those and early retirement will be more than a distant dream for legions of RRSP-rich Canadians. Added to the previous year's 12.5-per-cent average gain, investors have reaped $41.30 in profit for every $100 invested at the start of 1995. The widespread enthusiasm for fund investing is not hard to understand: in a year when North American stock markets outperformed even the most optimistic forecasts, the average Canadian equity fund returned a juicy 25.6 per cent in 1996. Or does it? With the annual RRSP season now in high gear - the deadline for 1996 contributions is March 1 - Canadian investors are going crazy for mutual funds, shovelling money into them at an estimated rate of $2 billion a week.