Monthly Mutuals Analysis
Dateline: 02/17/00
It used to be that the labour sponsored funds were popular as a tax savings measure, but not recommended as investments. That may have changed now, especially in British Columbia where the Working Opportunity Balanced Fund has a superb annual compounded five year track record of 14.38%. It returned 50.54% in 1999 and is up 11.19% so far this year.
True, the fund had one really hot investment that paid off in spades. It invested $4 million in HotHaus Technologies between 1996 and 1999, and ended up selling the company to Broadcom Corporation for a $100 million profit last August. But the company has other interesting companies in its portfolio as well, other potential big winners.
Consider AnorMED Inc., the biotech company specializing in the use of metals in medicine. Its stock has more than doubled since mid-November. Or Xillix Technologies, another biotech company that develops imaging technologies to detect cancer. Its stock has tripled since mid-November, though it is down from its high last May.
Working Opportunities has 26% of its portfolio in biotech, 26% in advanced manufacturing and another 26% in information technology. 9% is invested in B.C.'s burgeoning film industry.
But that's just one of the funds. What about the others? Looking at one year returns, ten of the 23 funds did better than 20% for the year to January 31, 2000. And five of those have a better than 15% three year annual compounded return. One other hasn't been around long enough to post a three year track.
Looking at returns for 1999, the Dynamic Venture Fund put in a stunning 99.06% return followed by Triax Growth with 58.88%. Looking at the year to date, six weeks to Feb. 16th, the Capital Alliance Ventures Fund returned 46.56% in that short span. In fact eight of the funds have done better than 20% for the year to date and eleven have done better than 10%. Not too shabby.
Follow the link to see a table of the 23 funds with their availability by province and their annualized returns for the last five years.
Labour
Sponsored Mutual Funds Table (new)
Labour Sponsored
Mutual Fund Net Links (new)
The labour sponsored funds generally offer investors an immediate 30% tax credit. On top of that they are all RRSP eligible. So a person in the 26% tax bracket can effectively more than double her tax savings by investing in a labour sponsored fund in her RRSP.
There are disadvantages to be sure. Most labour sponsored funds require the investor to hold the fund for a minimum of eight years. And because they are all venture capital funds, they are a riskier investment and could do poorly. Most are also restricted to sale in a particular province though three are available in all provinces and Triax Growth is available everywhere except Saskatchewan and New Brunswick.
These funds are for aggressive, risk tolerant investors who don't mind hanging in there for eight years. And of course, there are the tax advantages!
Now on to look at our Power Performers for January. There are fifty funds making our list this month. Of those an amazing 24 are Super Power Performers. Those are funds with annual compounded rates of return in excess of 25% for each of the one year, two year, three year and five year periods.
Ten of the Super Power Performers are American equity funds. Eight are international equity funds. Four are telecom and/or technology funds. And two are Canadian equity funds (indicated in the chart by an R for RRSP eligible).
In the regular Power Performers list there are nine more Canadian funds, six more American funds, and eleven more international funds.
As noted last month, we are discontinuing charting our RRSP Performers now that there are a fair number of RRSP eligible Power Performers.
Comments? Suggestions? Why not post them on our Bulletin Board or email me.
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Mutual Fund Database of Key Links - Relatively new to this site, our database provides targeted links to GLOBEfund, the Fund Library, Portfolio Analytics, Sedar and, of course, the company's homepage for the over fifty mutual fund companies listed.
Recent Fund Articles - The latest fund articles from the Globe & Mail.
Mutual Fund Links - Our own collection of mutual fund links.
Mutual Fund Companies - An extensive collection of links to mutual fund company homepages.
The Fund Counsel - Levi Folk and Richard Webb are two highly respected mutual fund analysts. Their site is definitely worth checking out.
Marco's Power Performers Index Page
Marco's Power Performers to January 31, 2000
Note: The author is a financial journalist and not a professional investment advisor. Information contained here should not be construed as investment advice.