Looking to invest in a mutual fund and wondering which is the best mutual fund in Canada? Then this post is for you.
Due to the wide diversification, shared benefits/risks and active professional management, it is obvious why mutual funds continue to attract so many investors in Canada.
In this post, I review the highest performing mutual funds in Canada with relatively low fees for different levels of risk. We also give you some tips on choosing the right mutual fund for your needs.
Whether you're just starting to invest or looking for a more conservative option, read on for the best mutual funds in Canada!
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The best mutual funds in Canada
Mutual funds in Canada have different investment objectives and risk levels. In this compilation, we'll examine the top-performing mutual funds in Canada in the following categories:
- pension fund
- Conservative Fund
- Balanced Funds
- Small/Mid Market Cap Funds
- Large-cap funds
- emerging market funds
- real estate funds
After reading this review, you will easily find the best mutual fund to suit your needs in Canada. Let's start!
Best Fixed Income Mutual Funds in Canada
Bond or bond funds are income-oriented funds designed for investors with a low-risk profile.
Whether you're looking for a short-term or long-term stable income, consider the following best fixed income mutual funds in Canada.
| Profile | RBC Bonus Fund – O | RBC Global Corporate Bond Fund – O | TD–D Canadian Bond Fund | Bono TD Canadian Core Plus – I | Rentenfonds de PH&N – O |
| start time | 5. September 2006 | December 31, 2007 | October 20, 2015 | 4. September 2007 | October 31, 2002 |
| net worth | $22,381.14 million | $12,376.10 million | $6,240.08 million | $18,996.17 million | $9,177.64 million |
| minimum investment | Variable | Variable | $100 | $100 | Variable |
| MER | 0,03 % | 0,04 % | 0,67 % | 1,34 % | 0,02 % |
| 1 year right of return | -6,6 % | -8,0 % | -7,57 % | -8,23 % | -6,6 % |
| Capital Gains Distribution Frequency | Yearly | Yearly | Quarterly | Yearly | Quarterly |
Best Conservative Mutual Funds in Canada
If you're looking for a low-risk fund that invests in debt and stocks, you can count on conservative mutual funds. Below are some of the best performing and most conservative mutual funds to choose from.
| Profile | RBC Select Very Conservative Portfolio – A | RBC Select Conservative Portfolio – A |
| start time | March 9, 2009 | December 31, 1986 |
| net worth | $13,837.79 million | $36,447.10 million |
| minimum investment | $500 | $500 |
| MER | 1,69 % | 1,85 % |
| 1 year right of return | -5,9 % | -4.9 |
| Capital Gains Distribution Frequency | Yearly | Yearly |
The best balanced mutual funds
Balanced mutual funds are designed for medium-risk investors who want to invest in a portfolio with a mix of stocks and bonds.
Below are some of the best balanced mutual funds to choose from in Canada.
| Profile | TD Comfort Balanced Wallet – F | RBC Select Balanced Portfolio – A |
| start time | 16. August 2018 | December 31, 1986 |
| net worth | $9085.02 million | $47,853.78 million |
| minimum investment | $500 | $500 |
| MER | 0,94 % | 1,95 % |
| 1 year right of return | -3,76 % | -4,9 % |
| Capital Gains Distribution Frequency | Quarterly | Yearly |
Related:Canada's Best Balanced ETFs
Best Small/Mid Market Cap Mutual Funds in Canada
If you want to benefit from less established or smaller companies with a lot of growth potential, consider small- and mid-cap mutual funds. Since these companies do not have an established track record, you must have an above-average level of risk to invest in them.
However, the main benefit of small- and mid-cap mutual funds is that they can generate high returns when companies are performing well.
The following are some of the best small/mid market capitalization mutual funds to consider.
| Profile | Mackenzie US Mid Cap Growth Kl – F | Mawer Global Small Cap-Serie - A | Mawer's New Canada Series – A. Mawer | Serie EdgePoint Global Portfolio - A | Serie EdgePoint Global Portfolio - F |
| start time | January 2003 | 2. October 2007 | January 15, 1988 | November 17, 2008 | November 17, 2008 |
| net worth | $3.3 billion (all series) | $3,129.4 million | $1,348.3 million | $10.9 billion | 10 billion dollars |
| minimum investment | – | – | – | 20.000 $ | 20.000 $ |
| administration fee | 0,80 % | N / A | N / A | 1,80 % | 0,80 % |
| MER | 1,05 % | 1,77 % | 1,35 % | 2,11 % | 0,97 % |
| 1 year right of return | -4,0 % | -17,7 % | -18,7 % | 4,25 % | 5,43 % |
| Capital Gains Distribution Frequency | Yearly | Yearly | Yearly | Yearly | Yearly |
Best Large Cap Mutual Funds in Canada
Unlike small/mid market capitalization mutual funds, large-cap mutual funds invest in large companies with established track records.
Although the potential for large companies is generally limited, you still need to have a medium to high risk tolerance to invest in large-cap mutual funds.
If you're sure you can tolerate the risk, check out some of the best large-cap mutual funds in Canada below:
| Profile | PH&N US Multi-Style All-Cap Equity Fund – O | Mawer International Stock Series - A | RBC Canadian Dividend Fund - A | RBC Canadian Dividend Fund - O | RBC European Equity Fund – O |
| start time | June 30, 2010 | 6. November 1987 | January 31, 1993 | 5. September 2006 | December 31, 2007 |
| net worth | $8,263.65 million | $768.2 million | $19,992.76 million | $19,992.76 million | $6,539.49 million |
| minimum investment | Variable | – | $500 | Variable | Variable |
| administration fee | N / A | N / A | 1,50 % | N / A | N / A |
| MER | 0,06 % | 1,40 % | 1,76 | 0,02 % | 0,02 % |
| 1 year right of return | -0,4 % | -16,7 % | -1,6 % | 0,2 % | 5,9 % |
| Capital Gains Distribution Frequency | Yearly | Yearly | Yearly | Yearly | Yearly |
Best Emerging Market Mutual Funds
Emerging market mutual funds invest in developing countries, including Russia, China, India, and Brazil. Although these mutual funds tend to have high levels of risk, you can expect big returns.
Below are some of the best emerging market mutual funds to choose from.
| Profile | Vanguard Emerging Market Select Stock Fund | RBC Emerging Markets Equity Fund – A | BlueBay Emerging Markets Corporate Bonds – O | Fidelity Emerging Markets Portfolio – A |
| start time | 27. June 2011 | December 23, 2009 | February 27, 2017 | December 8, 1994 |
| net worth | $797.200 million | $6,170.80 million | $993.14 million | 3+ billion dollars |
| minimum investment | 3.000 $ | $500 | Variable | Negotiable |
| administration fee | N / A | 1,85 % | N / A | N / A |
| MER | 0,78 % | 2,22 % | 0,11 | 2,51 % |
| 1 year right of return | -12,60 % | -3,5 % | 1,6 % | -7,85 % |
| Capital Gains Distribution Frequency | Yearly | Yearly | Yearly | Yearly |
The best real estate funds
If you're looking for a mix of growth and yield along with stocks and bonds, consider real estate mutual funds. However, you must have a medium to high risk tolerance to invest in real estate mutual funds.
Listed below are some of the best real estate mutual funds in Canada.
| Profile | Scotia Private Real Estate Income Pool – M | Russell Inv–F Global Real Estate Group | CI-A Global REIT Fund |
| start time | 26 November 2012 | January 1, 2013 | December 24, 1997 |
| net worth | $4.6+ million | $352.54 million | $638.74 million |
| minimum investment | 250.000 $ | N / A | $500 |
| administration fee | N / A | N / A | 1,90 % |
| MER | 0,25 % | – | 2,32 % |
| 1 year right of return | – | -11,34 % | -12,7 % |
| Capital Gains Distribution Frequency | Monthly | – | Monthly |
Related: Best Real Estate Crowdfunding Websites in Canada
What is a mutual fund?
A mutual fund is a mutual fund that pools money from many investors to invest in a variety of securities. Mutual funds are managed by professional money managers who seek to generate capital gains and/or income for the fund's investors.
There are many different types of mutual funds that can be categorized based on your investment objectives. For example, there are funds that focus on stocks, bonds, or a combination of both. There are also index funds that track a specific market index, such as the S&P 500.
Why invest in mutual funds?
Mutual funds offer investors a number of advantages.
First offerdiversificationas they allow you to invest in a variety of securities within one fund. This can help reduce the risk since you are not putting all your eggs in one basket.
Also, mutual funds are a relatively easier way to invest andquickly build a diversified portfoliocompared to buying individual shares. Management and professional guidance is another advantage.
5 Main Types of Mutual Funds in Canada
There are different types of mutual funds in Canada with different objectives, allocations, risk levels, and returns. Below are the top five types of mutual funds you should know about.
1. Equity Funds
Equity funds refer to portfolios with allocations of equity or dominated by equity. Assignments are often targeted at specific companies and markets.
For example, some stock funds target Canadian, US, or international stocks. They can also target small, medium or large companies.
Although stock mutual funds are typically high risk, they offer some of the highest returns.
2. Pension Fund
Bond or fixed income mutual funds provide short-term and long-term income by investing in bonds. They can be government bonds, corporate bonds, aggregate bonds, etc.
If you have a low risk appetite and are looking for a long-term investment vehicle, this type of mutual fund may be suitable due to its low volatility.
Related:10 safe investments with high returns in Canada
3. Balanced Mutual Funds
A blended mutual fund invests in both stocks and bonds in a portfolio. Like other balanced portfolios, balanced mutual funds typically aim for an allocation of 50% stocks and 50% bonds (60% stocks and 40% bonds is also common).
With thisasset allocationYou can expect an above-average investment return with medium risk.
4. Index funds
An index fund is designed to track the performance of a specific market index. You could invest in stocks or bonds based on the target market index.
Unlike other mutual funds, which are actively managed, index mutual funds are passively managed.
5. Money Market Mutual Funds
Money market mutual funds are low-risk, fixed-income mutual funds designed to provide high levels of cash/cash equivalents and debt liquidity.
Due to their short maturities and low credit risk, money market funds are among the best short-term investment vehicles and are perfect for investors with short-term financial goals.
What are the pros and cons of mutual funds?
If you're just starting out, it's important that you know the good and the ugly of mutual funds before you invest. let's go inside
Benefits of Mutual Funds
- Common Benefits/Risks:Because you're not just investing in the mutual fund, you make a proportional gain when the fund performs well and a proportional loss when the fund underperforms.
- diversification: Mutual funds invest in various securities, markets, and companies to maximize returns.
- professional management: Because a professional portfolio manager actively invests and manages your funds, you can focus on other areas of your life.
Disadvantages of Mutual Funds
- Extremely high fees: Compared to ETFs, mutual funds have extremely high management fees and management expense ratios (MERs) that can reduce your investment returns.
- low performance: Due to high fees and active management, mutual funds often underperform the market.
How do I choose a mutual fund in Canada?
From the overview of the best mutual funds in Canada above, you can see how the funds differ for various reasons. As a result, it can be difficult to determine which one suits your needs.
But like any other investment vehicle, you must first determine your risk tolerance before deciding which mutual funds to choose.
Once you've determined your risk tolerance, you can determine your perfect mutual fund by considering the following factors:
1. Investment objective
What are you investing in? Are you investing to finance a mortgage? DIY? debt payment? Retirement? Or parenthood?
The interesting thing is that no matter what your investment objective is, there is a mutual fund made just for you. All you need is to identify your needs and act accordingly.
2. Minimum investment
As highlighted above, mutual funds in Canada have different minimum investment requirements. If you likeStart investing with small amounts(say less than $1,000) you can find several mutual funds to suit your needs.
Because the minimum investment doesn't affect portfolio performance, you can't go wrong with any of the funds above that suit your income level.
3. Rates
It is well known that mutual funds are extremely expensive compared to other investment vehicles. However, not all mutual funds are expensive, as you can see in the table above.
In general, choosing a mutual fund with a low MER and decent management fee and track record will help you maximize your investment returns.
4. Fund performance
While past portfolio performance is not a guarantee of future returns, it may be an indication of the likely outcome of your investment.
That's why it's important to know the performance of your favorite fund, from 1-year returns to total returns from inception.
5. Distribution frequency
As you can see from the review above, different mutual funds in Canada have different distribution frequencies.
Depending on your investment objective and situation, you may want to receive monthly, quarterly, or annual dividends.
Mutual Fund Alternatives
Depending on your investment goals, there are a few mutual fund alternatives to consider.
1. Exchange Traded Funds (ETFs)
Exchange-traded funds (ETFs) are similar to mutual funds in that they offer diversification and professional management. However, ETFs tend to be less expensive than mutual funds.
Regardless of your risk appetite or investment objective, there are several top ETFs to choose from. For more diversification, you can choose oneAsset Allocation ETFsthat have different asset classes and are globally diversified.
Check here thebest asset allocation ETFs in Canada.
2. Roboassessor
Automated advisors are a newer type of investment that uses technology to provide low-cost, automated investment management.
Just like with mutual funds, you simply move your money to the robo-advisor and your money is invested in a portfolio that is tailored to your risk tolerance.
Some of theBest Robo Advisors in CanadacontainRiquezasimple Invest,Questwealth-PortfolioYonly wealth.
3. Individual Stocks and Bonds
If you are comfortable with a higher level of risk, consider investing in individual stocks or bonds instead of (or in addition to) mutual funds.
Unlike the other two mutual fund alternatives above, managing a portfolio of individual stocks can be stressful and difficult to manage, but it can also be cheaper if you use one.commission-free mediation.
Are mutual funds safe?
Mutual funds are safe investment vehicles. However, the security of your funds depends on where and how your funds are invested.
For this purpose, it is essential to invest in a regulated mutual fund company with experienced portfolio managers. One of the key regulatory bodies for mutual fund managers in Canada is the Investment Industry Regulatory Organization of Canada (IIROC).
However, depending on the risk of the portfolio and the mutual fund's assets, your investment will still be subject to market volatility. Therefore, you should invest according to your risk tolerance.
Are ETFs Better Than Mutual Funds?
The ETF vs. mutual fund debate has long been fought between passive and active investors.
Passive investors believe that ETFs are better because they are low-cost, highly liquid, generally passively managed, and often outperform active investors.
On the other hand, active investors believe that mutual funds are better because they are highly diversified and actively managed by professional portfolio managers.
In general, I recommend ETFs over mutual funds if you want the same diversification you get with mutual funds but at cheaper rates.
Some Frequently Asked Questions about the Highest Yielding Mutual Funds in Canada
Are mutual funds a good investment in Canada?
A mutual fund is a good investment for investors who want to achieve broader diversification with a small investment. Newbies with limited knowledge of the stock market can also invest in mutual funds and have a professional portfolio manager take care of everything.
However, mutual funds may not be suitable for investors looking for a low-cost, passive portfolio.
Do mutual funds pay dividends?
Yes. Mutual funds pay dividends to investors according to the fund manager's distribution schedule. Depending on the mutual fund, you may receive monthly, quarterly, or annual dividends.
Is it better to buy stocks or mutual funds?
Depending on your risk appetite and investment objective, you can't go wrong with stocks or mutual funds. However, buying a single stock is not only expensive, but generally riskier compared to mutual funds.
RELATED:Best Dividend ETFs in Canada
The bottom line on the best mutual funds in Canada
Mutual funds are one of Canada's oldest investment vehicles and continue to attract investors with varying levels of risk and investment objectives.
If you are familiar with the active investment strategy of mutual funds without worrying about cost, the best thing to do is to choose the perfect portfolio. The perfect portfolio here means a mutual fund that matches your risk tolerance, investment objective, minimum investment budget, and payment frequency.
With that in mind, I hope you can now use the above compilation to identify the perfect mutual fund for your needs. If you enjoy reading this review, please visit our blog section to learn more about the best investment solutions in Canada, such as:
- The best investments in Canada