Best Mutual Funds in Canada

This Page's Content Was Last Updated: August 18, 2022
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What You Should Know

  • Mutual Funds are Canadians' most common form of financial investment.
  • Mutual Funds are designed with people who have a financial adviser managing their money in mind.
  • There has been a multi decade trend of money flowing into mutual funds and their assets under management increasing.
  • Recently, in the second quarter of 2022, there has been an exodus from mutual funds and assets under their management has been shrinking.

Assets Under Management (AUM) for Canadian Mutual Funds

A mutual fund is a legal structure and an old financial innovation that allows investors to pool their resources and thus enjoy diversification benefits while using savings from economies of scale. Mutual funds come in different series or classes. Mutual funds classes do not have any standard. Yet it is common to see class A, where the fund pays the adviser and charges the investor and class F, where the investor is assumed to pay their adviser directly.

This page presents a list of the most successful Canadian mutual funds. An attempt is made to have funds from each category. In the table, you will find some funds with weak returns but those returns are the best in their category. Note that we live in a rapidly changing world, so there is no guarantee for a repeat of the past returns. Then we would proceed to a concise introduction of Canada's most famous mutual fund issuers and present a list of their more successful funds.

There are at least three different types of classification for mutual funds. One classification is based on the legal structure of the fund. Mutual funds can be open-end funds, closed-end funds and unit investment trusts. Funds introduced on this page are open-end funds.

Another important classification divides funds into actively managed and passively managed funds. Passively managed funds have outsourced the selection of the securities they would hold to an index provider. Such a fund would simply replicate the composition of S&P 500, S&P TSX Composite Index or any other index. While actively managed funds need to research different securities and decide about which security and when they buy and also when to sell.

Best Performing Canadian Mutual Funds

Name1-year return3-years annualized return5-years annualized return10-years annualized returnUnderlying assetsMERLoad
Canoe Energy Alpha Fund*87%35%25%NAEnergy Equity
  • F: 1%
  • A: 2%
None
Ninepoint Energy Fund78%54%18%7.5%Energy Equity
  • A: 3.93%
  • F: 2.55%
  • ETF: 5.12%
None if held > 20 days
Fidelity Global Value Long/Short73%NANANAUnconstrained
  • F: 1.54%
  • B: 2.71%
  • F5/F8: 1.56%
  • S5: 2.73%
  • S8: 2.82%
None
Altema Diversified Equity Market Neutral*50%4.9%NANAUnconstrained
  • >2%
None
Wealhouse Lions Bay*43%29%NANAUnconstrained
  • F: >1.5%
  • A: >2%
None
North Stream Credit Strategies Fund*22%19.7%13.7%NACorporate Bonds
  • >1.5%
0.75% before 3 months
Rise Properties Trust21%8.4%8.6%NAReal Estate
  • F: 3.38%
  • A: 2.66%
NA
Leith Wheeler US small/mid cap-7%7.7%8.5%NAU.S. Equities
  • B: 1.32%
  • F: 1%
None
CIBC US Money Market Fund O0.4%0.89%1.42%0.96%Short Term Debt
  • A: 0.15%
  • Premium: 0.13%
  • F: 0.12%
None
RBC $U.S. Money Market Fund O0.37%0.84%1.37%0.92%Short Term Debt
  • A D: 0.15%
  • F: 0.13%
  • O: 0.02%
None
BMO Low Volatility U.S. Equity ETF12.5%NANANAU.S. Equities
  • F/I/F4: 0.4%
  • D: 0.67%
None for most series
TD U.S. Low Volatility Fund8%5%7.5%NAU.S. Equities
  • F: 0.89%
  • T: 2.18%
  • H: 2.15%
  • FT: 0.88%
  • D: 1.51%
  • A: 2.24%
  • I: 2.23%
None after 7 days
Canoe Asset allocation portfolio F3.85%11.55%8.28%8.53%Canadian Equity and Fixed Income
  • F: 1.29%
  • F6: 1.5%
  • D: 1.71%
  • A: 2.45%
  • T6: 2.6%
  • X: 2.49%
None, A & T6 has choice of front or back load, X has front load
RBC retirement 2020 portfolio FT5-5.1%3.5%4.5%NAUnconstrained
  • F: 0.82%
  • T5: 1.79%
  • A: 1.69%
None
Health Care Dividend Fund F6.9%9.6%8.4%NADividend Payers
  • None
None
IG Mackenzie Global Health Care F4.6%12%9.2%NAHealth Related Equity
  • F: 1.25%
  • J: 2.52%
  • B: 2.78%
  • A: 2.8%
NA
Middlefield Global Agriculture F-0.45%6.44%5.09%7.49%Agriculture and Food Equity
  • A: 2.55%
  • F: 1.47%
None
Purpose Real Estate Income F-5.2%3.5%5.6%NAReal Estate Equity
  • ETF: 0.8%
  • D: 1.09%
  • F: 0.78%
  • XF: 1.61%
  • XA: 2.66%
D Front
Ninepoint Global Real Estate F-6.5%5.2%6%NAReal Estate Equity
  • D: 2.2%
  • F: 1.65%
  • A: 2.6%
None after 20 days
CI Preferred share Fund I-3.8%8.65%4.9%NAPreferred Shares
  • A: 1.5%
  • E: 1.3%
  • EF: 0.8%
  • F: 0.9%
None
Purpose Canadian Preferred Share F-4.1%10.2%2.8%6.7%Canadian Income Producing Securities
  • F & ETF: 0.9%
  • A: 1.7%
None
TD Precious Metals Fund F-8.8%6%4.9%0.1%Gold, Silver and Platinum
  • F: 1.1%
  • I & A: 2.3%
  • D: 1.6%
None after 7 days
CIBC Precious Metals Fund O-10%7.5%6.5%0.1%Canadian Companies in the Precious Metals
  • A: 2.3%
None
BMO SIA Focused North American Equity I5.9%8.3%NANATechnical Buying
  • A: 1.9%
  • F & ETF: 0.8%
  • D: 1.2%
None
Dynamic North American Dividend Private Pool O5.6%9.7%8.9%NANorth American Dividend Payers
  • O: 0.05%
  • I: 0.16%
  • F: 0.94%
  • A: 2.1%
Front end or deferred

Note: In preparing this table, an attempt has been made to put together best performing funds from different categories.

*Only available to accredited investors.

Some Funds are Inaccessible for the Public

According to securities law in Canada (and the US), a prospectus document should be prepared before any investment is offered to the public. The prospectus would provide detailed information about that investment so investors can make informed decisions. Preparing a prospectus takes considerable time and effort and makes it difficult for small and medium-sized enterprises (SMEs) to access capital.

Securities law allows exceptions to the prospectus requirements to facilitate access to capital for SMEs and startups. The most important exception for providing a prospectus is accredited investor exemption. According to the Ontario Securities Commission, an accredited investor is a person who earns more than $200k per annum or earns $300k with a spouse or has net financial assets over $1 million. The accredited investor status may also result from having total net assets of over $5 million. Similar criteria in other jurisdictions make one an accredited investor.

These exceptions are justified because, on the one hand, SMEs and startups need affordable financing to be able to continue their economic activity. On the other hand, accredited investors can afford to lose a few of their investments. So accredited investors do not need the government to protect them from a risk they are willing to take. Some of the funds in the table above have not prepared a prospectus and are thus only available to accredited investors.

Mutual Fund Asset Flow

During the past six months, high inflation has forced the Federal Reserve and the Bank of Canada to increase their benchmark rates and reduce the money supply in their respective economies. As a result, asset prices deflated while savings account and GIC rates rose. Thus over the past quarter, you see a flow of money out of long-term funds. Long-term funds include equity funds, balanced funds and bond funds. Note that money market mutual funds act as a substitute for savings accounts and thus attract money while people escape from long-term funds.

Enormous Asset Accumulation in Funds
Fund TypeNet Assets in Billions of dollars
Total Mutual Fund1788
Total ETF288.9
Balanced Mutual Fund882.4
Equity Mutual Fund626.5
Bond Mutual Fund228.6
Specialty Mutual Fund21.6
Money Market Mutual Fund28.9
As of June 2022
Flow of Money Into or Out of Mutual Funds
Second Quarter 2022

Cost of Investing in a Fund: Management Expense Ratio (MER)

Expense ratio (ER) or management expense ratio measures the administrative and operative expenses of a fund as a multiple of its average assets under management (AUM) during the year.

Annual MER = (Total costs incurred by the fund during the year)/(Average AUM during the year).

Often, the most significant component of the fund expenses is the fee paid to the fund's investment manager or advisor (usually the same corporation as the fund’s sponsor). This fee is known as the management fee and is also referred to as a maintenance fee. Other necessary expenses include record keeping, auditing, accounting, custodial services, taxes and legal expenses.

Note that each time the fund spends money, that expenditure would be reflected in the fund's NAV. As a result, when calculating the fund's performance, you automatically consider the fund's ER. The cost of advertising and promotion of the fund can also be considered among the fund's expenses. Often trading commissions are not included in the MER, and the trading expense ratio (TER) is defined as the (trading costs incurred by the fund)/(Average AUM during the year).

Other expenses you might incur when investing in a mutual fund are loads, contingent deferred sales charges and redemption fees.

The Flow of Money Into Canadian Mutual Funds
During COVID, Jan 2020 - Jun 2022

Tax Considerations

Mutual funds are often set up as partnerships. As a result, even if you do not cash any of your investment during the year, you face tax obligations because of your share in securities sold by your mutual fund. Thus it is best to make your mutual fund investments under a tax shelter. Some tax shelters are specifically designed for a specific saving goal; they include Registered Retirement Savings Plan, Registered Education Savings Plan, and Tax-Free First Home Savings Account. There is also the Tax-Free Savings Account which is a general purpose tax-sheltered account.

Long Rise in Mutual Fund Assets

Around the year 1980, inflation was rampant in North America. The Bank of Canada and the Federal Reserve both increased interest rates and tightened the money supply to suppress inflation. Inflation dampened and stayed low for nearly four decades after that. This low inflation was despite monetary policy gradually becoming looser and interest rates (including prime rates and mortgage rates) getting lower.

An often overlooked factor was at work behind the scenes. Most of the world stage was peaceful, and trade was expanding. Increased trade improved productivity and acted as a significant deflationary force. The result was that central banks were free to print money and lower interest rates without serious repercussions, and governments could run sizable deficits without severe consequences.

Even extensive Trump-era protectionist tariffs could not stop this trend. But finally, pandemic disruptions to supply chains killed the deflationary force of globalization. So money printing and large deficits during the pandemic caused severe inflation, which we are dealing with now.

On the one hand, interest rates over the last few decades reduced the payout of safe saving accounts and inflated asset prices. During this period, those investing in savings accounts and GICs mostly lost to those who bought assets, whether those assets were real estate, stocks or even long and medium-term bonds.

People often decide based on their most recent experiences. During decades of asset prices outperforming savings accounts, more and more savings moved from savings accounts and GICs to long-term funds. This flow into funds is because long-term funds are the most convenient way of owning assets. This trend is reflected in a large amount of assets under management in Canadian funds.

The calculators and content on this page are provided for general information purposes only. WOWA does not guarantee the accuracy of information shown and is not responsible for any consequences of the use of the calculator.