| Monthly Mutuals Analysis |
Dateline: 4/19/99
For new readers, a quick explanation of my Power Performers and RRSP Performers. If you're familiar with how and why I chart them, you can skip past the italicized section. I started charting my Power Performers back in July 1997 and it is simply a table of the mutual funds that have delivered returns of better than 20% for each of the one year, two year, three year and five year periods. I've archived each monthly chart since then here at Investing: Canada.
The rationale behind the chart is that we want to be invested in the best mutual funds possible. That means funds with the best performance, both in the short term and the long term. Generally speaking, a fund that generates excellent returns over each of the time frames considered will have short term momentum as well as a long term track record.
I started my RRSP Performers November last year because of a perceived problem. Namely, none of the Power Performers qualified as Canadian content in RRSPs. Since RRSPs only allow 20% foreign investment, my Power Performers was not very helpful to people wanting insight into good RRSP investments. So I relaxed the standards and came up with the RRSP Performers. To qualify, a fund must be 100% RRSP eligible and have a return of better than 15% in each of the relevant time periods.
Why did I pick 20% for Power Performers and 15% for RRSP Performers? Originally I was going to use 15% for the Power Performers because Warren Buffett has stated that his goal was to do better than 15% a year. But that generated way too many qualifying funds to handle, so I upped the ante to 20% to cut down on the number of funds charted. Since I began doing this, the lowest number of Power Performers has been four (last September) and the largest number has been 52 (last April).
Now on to this month's report!
Last month as the large caps took a breather, the riskier funds - small cap funds like Sagit's Cambridge Funds and the Latin American funds took a huge surge forward. In March this pattern continued.
Three of Sagit's funds topped Southam News list of the Top 25 Funds for the period. Sagit's Trans-Canada Value Fund made an astounding gain of 39.26% in March, followed closely by the Cambridge Global Fund in US$ and the same fund in Canadian dollars. Two other Sagit Funds also made the list. For more information on the Sagit funds see last month's Monthly Mutuals Analysis which looked at them in some detail.
Latin American funds also did well. Seven made the Top 25 list. And new to the list for March were a spate of Resource Funds, eight of them.
Although only one Japanese fund made the Top 25 list for the month, the Three Month report shows four of them, and the Financial Post reports that Japanese Equity funds as a sector returned 11.9% in March, second only to the Latins which returned 19.9%.
Altamira launched its e-business Fund to much fanfare a few months ago and it has quickly made the Top 25 list for both the One Month and Three Month periods.
One month performance, of course, should not be used as a guide to selecting funds for purchase. The time frame is too short to form a valid judgment on a fund. But it is useful as an indicator of shifts in the market. The Resource Sector, Japanese funds and the Latin American funds had been languishing but may now be rebounding. Whether this marks a long term shift is another question, but some investors may want to consider diversifying into Resources and Japanese funds, and perhaps even into Latin America.
The Power Performers Report
After dropping from 28 funds in January to only 10 for February, the number of Power Performers rebounded to 17 in March. Of these, 15 are American Equity funds and two are Science and Technology funds.
Four funds are Super Power Performers, having returned better than 25% in our four relevant time periods. Of these, two funds, the AGF American Growth Fund and the Ethical North American Equity Fund stand out for having made this select list continuously since November. If you have any money in American Equity funds or are considering doing so, those are the two to watch.
One newcomer to the list is the Cambridge American Growth Fund, but with a one year return over 130%, the numbers are heavily skewed by recent performance. It should be approached with caution by any investor because of its volatility.
Unfortunately, our RRSP Performers have not done so well. They slipped from seven to three in February, but unlike their American cousins, they did not rebound. Only one fund, the Scotia CanAm Stock Index Fund, made the RRSP Performers list. Canadian equities continue to languish, though in recent weeks the TSE 300 has been making gains touching the 7000 mark.
If the markets continue to reach new highs in the next two weeks, we can expect more funds to make the RRSP Performers list next month.
One of the categories we chart, the funds returning better than 15% over a fifteen year period, has shown some interesting changes. When we first started charting it in October 1997, there were twelve funds on the list, four of them Canadian. It dwindled down over the next year reaching as low as one fund in August and September. Since then it has grown steadily and this month's list has 11 funds on it, every one of them U.S. or International Equity funds.
Is it time to play the resources card? - Globe & Mail article on the Resource Sector funds.
Small cap fund stands out from crowd - Globe & Mail article about the CIBC Small Cap Fund which has bucked the small-cap trend to losing money in the last year.
India Fund makes stunning turnaround - Globe & Mail article about the 20/20 India Fund which has done very well recently.
The ABC of Mutual Funds - A primer on mutual funds from the Financial Post's Jonathan Chevreau.
Marco's Power Performers Index Page
Marco's Power Performers to March 31, 1999
Marco's RRSP Performers to March 31, 1999
Top 25 Three Month Performers to March 31, 1999
Funds Performing Better Than 15% Annual Compounded Rate Over 15 Years
Funds Performing Better Than 15% Annual Compounded Rate Over 10 Years
Disclaimer: As with all my columns here, I should re-iterate a precaution. I am not a professional financial advisor. I am a financial journalist and editorialist. The views in these columns are my personal opinions. The author may hold interests in a number of the funds mentioned in this article.
Investing (Canada) Notes:
I am now posting my Power Performers and other charts using the MiningCo standard page format instead of full page charts as I have done before. While this introduces a greater consistency in page appearance, it does not lend itself well to printing for those of you who may have liked to print off our charts. So I am creating a special mailing list and will e-mail our new charts as they appear each month in a format you can print without the ads, headers, links and that picture of my smiling mug. So if you want to get on the list, e-mail me.
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