As the calendar flips to February, many Canadians find themselves contemplating two main decisions: escaping the cold with a tropical getaway or deciding where to allocate their RRSP contributions. While I may not be the best person to offer travel recommendations, I can certainly guide you through the latter. Picking the right mutual fund can be a daunting task given the myriad of options available. This article aims to simplify that process by highlighting the Best-Performing Mutual Funds in Canada for 2024.
Understanding Mutual Funds in Canada
Before diving into the best performers, it’s essential to understand what mutual funds are and how they operate in Canada. A mutual fund is an investment vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets. The main difference between Canadian mutual funds and those in other markets lies in their regulation. Canadian mutual funds are heavily regulated by the Canadian Investment Regulatory Organization (CIRO) and provincial securities laws.
Criteria for Selecting the Best Mutual Funds
Choosing the right mutual fund involves considering several factors. Here are the criteria used to identify the top mutual funds for 2024:
- Morningstar Medalist Rating: Funds must have earned a Bronze, Silver, or Gold rating, which assesses the fund’s potential to outperform its peers.
- Morningstar Star Rating: Funds must have a 4 or 5-star rating, indicating strong past performance relative to category peers on a risk-adjusted basis.
- Market Weight Exposure to Canadian Equities: Funds with close to market weight exposure to Canadian equities, determined by the Canadian percentage allocation in the Morningstar Global Markets Index.
Top 10 Canadian Mutual Funds for 2024
1. CI Canadian Dividend Funds Series F
- 10-year annual return: 10.41%
- Index 10-year annual return: 7.61%
- Management Expense Ratio (MER): 1.33%
This fund focuses primarily on US and Canadian equities, with an 80% allocation in local stocks. It has consistently outperformed its benchmark index, even after accounting for fees.
2. Mackenzie Bluewater Canadian Balance Fund Series F
- 10-year annual return: 9.56%
- Index 10-year annual return: 7.60%
- MER: 1%
This fund is a mix of 60% stock and 40% fixed-income bonds from predominantly Canadian companies, with some international assets. Managed by Mackenzie Financial, it has shown significant improvement in performance, partly due to strategic changes in its management team.
3. AGF Global Select Series F
- 10-year annual return: 16.49%
- Index 10-year annual return: 11.53%
- MER: 1.22%
A global equity fund with a diverse portfolio comprising 50% US assets, 2.7% Canadian assets, and the remainder in the EU, Asia, and Latin America. It offers instant diversification and has rebounded strongly since the 2008 financial crisis.
4. Blue Bay Emerging Markets Corporate Bond Fund
- 10-year annual return: 1.97%
- Index 10-year annual return: 1.53%
- MER: 0.92%
This fund, now part of Royal Bank of Canada, focuses on European fixed-income debt. Despite modest returns, its low MER and global exposure make it an attractive option for diversification.
5. Mawer Global Equity Fund
- 10-year annual return: 12.51%
- Index 10-year annual return: 11.53%
- MER: Not specified
Mawer’s strategy of investing in “boring” but reliable stocks has proven successful. The fund includes holdings like Johnson & Johnson, Microsoft, and Alimentation Couche-Tard, and is known for its consistent long-term returns.
6. RBC Life Science and Technology Series F
- 10-year annual return: 18.82%
- Index 10-year annual return: 15.07%
- MER: 0.94%
Focused on tech and life sciences, this fund has significantly outperformed its benchmark during strong economic periods. However, it is more volatile during downturns.
7. TD U.S. Mid-Cap Growth Fund Class F
- 10-year annual return: 14.63%
- Index 10-year annual return: 13.36%
- MER: 1.13%
This fund invests in mid-cap US companies and has consistently delivered returns above its benchmark. It’s a good choice for those seeking actively managed funds.
8. Dynamic Canadian Dividend Series I
- 10-year annual return: 10.77%
- Index 10-year annual return: 7.89%
- MER: 0.08%
A conservative fund with a strong focus on dividend-paying Canadian companies. It offers a high yield and low expenses, making it ideal for income-focused investors.
9. North Growth Canadian Equity Fund Series F
- 10-year annual return: 11.52%
- Index 10-year annual return: 4.85%
- MER: 0.70%
This fund’s concentrated portfolio of small-cap stocks has led to significant outperformance. The requirement for fund managers to invest in their funds aligns their interests with investors.
10. PH&N Small Float Fund Series F
- 10-year annual return: 11.84%
- Index 10-year annual return: 4.85%
- MER: Variable
With a strategy of concentrated positions and a focus on larger names, this fund has delivered exceptional returns since its inception. However, it is available only to Royal Bank clients.
Here is the comparison table summarizing the top 10 best-performing mutual funds in Canada for 2024:
| Fund Name | 10-Year Annual Return (%) | Index 10-Year Annual Return (%) | Management Expense Ratio (MER) (%) | Initial Investment ($) |
|---|---|---|---|---|
| CI Canadian Dividend Funds Series F | 10.41 | 7.61 | 1.33 | 500 |
| Mackenzie Bluewater Canadian Balance Fund Series F | 9.56 | 7.60 | 1.00 | 500 |
| AGF Global Select Series F | 16.49 | 11.53 | 1.22 | 500 |
| Blue Bay Emerging Markets Corporate Bond Fund | 1.97 | 1.53 | 0.92 | N/A |
| Mawer Global Equity Fund | 12.51 | 11.53 | N/A | 500 |
| RBC Life Science and Technology Series F | 18.82 | 15.07 | 0.94 | N/A |
| TD U.S. Mid-Cap Growth Fund Class F | 14.63 | 13.36 | 1.13 | 100 |
| Dynamic Canadian Dividend Series I | 10.77 | 7.89 | 0.08 | N/A |
| North Growth Canadian Equity Fund Series F | 11.52 | 4.85 | 0.70 | N/A |
| PH&N Small Float Fund Series F | 11.84 | 4.85 | Variable | N/A |
This table highlights the key performance metrics and expenses associated with each fund, aiding investors in making informed decisions for their RRSP contributions.
Advantages of Investing in Mutual Funds
Mutual funds offer several benefits to investors:
- Diversification: Reduces risk by spreading investments across various assets.
- Expert Management: Fund managers handle investment decisions, leveraging their expertise.
- Low Cost: Pooled resources reduce transaction costs compared to individual investments.
- Convenience: Easy to manage through online brokerages, with options to reinvest dividends.
Conclusion
Investing in mutual funds is a prudent strategy for accumulating wealth and securing a better financial future. The key is to select funds that align with your risk tolerance, investment goals, and time horizon. The funds listed above have demonstrated strong performance and are managed by experienced professionals, making them worthy considerations for your RRSP in 2024. Always remember to diversify your portfolio and stay informed about market trends to make the best investment decisions.
