Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.
There are thousands of mutual funds available, covering various sectors of the market and carrying different degrees of risk. If you’re looking specifically for Canadian mutual funds, that narrows down your options some, but there are still more than 5,000 to choose from.
Since we can’t tell you the best funds — no one can predict future performance — we can at least tell you the biggest ones, based on assets under management (the total amount of money invested in each fund). Bigger, of course, is not always better, but it is at least an indicator of investor confidence. Before choosing which funds to invest in, you’ll also want to consider things like risk, past performance, and fees.
In our tables below, we rounded down the net assets of each fund in millions (M) or billions (B). We also included management fees as available. All figures are correct as of April 2022.
First, what is a mutual fund?
Mutual funds offer investors the chance to simplify and diversify their portfolio, but they can come at a steep price. One big reason mutual funds are expensive is that investors typically get advisors who work with them directly. Some automated advisors like Wealthsimple, however, still give you that personal touch, but with lower fees.
Although some mutual funds are very narrowly focused on a particular theme, industry, or subsector, there are also many that are much more diversified. These can be a stand-in for an entire portfolio and an easy way for investors to grow money.
Canadians started investing heavily in mutual funds when double-digit interest rates dropped in the early 1990s and investors sought higher returns. The thinking was that active management could “beat” the market.
Mutual funds were the fastest-growing financial product during the entire ’90s, with the value of assets under management increasing by 1,700%, from $25 billion in December 1990 to $426 billion by December 2001. Of course that money was spread out across about 1,800 different mutual funds, as opposed to the more than 5,000 that exist today.
Wealthsimple offers an automated way to grow your money like the world's most sophisticated investors. Get started and we'll build you a personalized investment portfolio in a matter of minutes.Best mutual funds by risk level
The first step in choosing any investment is to determine your own tolerance for risk. The general rule is that the greater the risk of losing the money, the greater the opportunity for growth. The lower the risk of losing money, the less chance for growth. Your personal risk level depends on various factors including how old you are, your tolerance for losing money, and your investment goals.
| Fund Name | Risk Level | Net Assets | 1 Yr Return | 3 Yr Return | 5 Yr Return | Management Fee |
|---|---|---|---|---|---|---|
| RBC Select Conservative Portfolio A | Conservative | 24B | 3.55% | 2.71% | 3.23% | 1.59% |
| RBC Select Very Conservative Port A | Conservative | 11B | 4.03% | 2.67% | 2.91% | 1.45% |
| RBC Select Balanced Portfolio A | Balanced | 27.5B | 3.22% | 3.16% | 3.91% | 1.67% |
| TD Comfort Balanced Port - I | Balanced | 8B | 2.03% | 1.74% | 2.53% | 1.60% |
| RBC Select Growth Portfolio A | Growth | 8B | 2.87% | 3.25% | 4.19% | 1.76% |
| Scotia Partners Growth Portfolio | Growth | 3B | 2.28% | 2.84% | 3.92% | 2.05% |
Best fixed-income mutual funds
Fixed-income mutual funds are conservative, low-risk investments. They work well for those looking for stable income instead of growth, and usually invest in debt rather than stocks. Note that, when bond yields are low, any income from these funds will be limited, and you may even lose money since the management fee could exceed the entire return.
The top 10 holdings of all the funds listed below are other bond mutual funds. It’s common practice for mutual funds to invest in other mutual funds, but this actually compounds the fees. Not only are you paying for your own management fees to select and trade the mutual funds securities, but the return of securities themselves is dampened by their own management fees.
| Fund Name | Description | Net Assets | 1 Yr Return | 3 Yr Return | 5 Yr Return |
|---|---|---|---|---|---|
| RBC Bond Fund O | Canada Fixed Income | 19B | 8.21% | 4.71% | 4.41% |
| TD Canadian Bond Fund - O | Canada Fixed Income | 13B | 7.15% | 4.45% | 3.90% |
| RBC Global Corporate Bond Fund O | Global Fixed Income | 11.5B | 5.94% | 4.08% | 4.31% |
| TD Canadian Core Plus Bond - O | Canada Fixed Income | 11.5B | 6.29% | 4.09% | 3.85% |
| PH&N Bond Fund O | Canada Fixed Income | 10B | 8.35% | 4.58% | 4.12% |
Best large market cap mutual funds
Large-cap mutual funds invest in huge, profitable companies that have an excellent track record and are established in their field. Because the companies are already so established, their future growth potential is limited. These mutual funds are medium to high risk because no matter how big a company is, it can still fail. Strong large-cap companies can also provide significant income since many pay dividends.
Which fund is right for you depends on how much exposure you’d like outside of Canada. For true diversification and greater growth potential, it’s prudent to invest additionally in the United States, and perhaps in Europe or Asia. That’s because most large-cap Canadian companies are concentrated in only three industries: oil, utilities, and financial services. To get exposure to high-quality consumer goods or technology companies, you’re probably going to need to widen your geographic interests.
| Fund Name | Description | Net Assets | 1 Yr Return | 3 Yr Return | 5 Yr Return |
|---|---|---|---|---|---|
| RBC European Equity Fund O | Europe Equity Large Cap | 7B | 6.36% | 2.29% | 4.01 |
| RBC Canadian Dividend Fund A | Canadian Equity Large Cap | 7B | -10.95% | -0.84% | 1.88% |
| PH&N US Multi-Style All-Cap Equity Fd O | US Equity Large Cap Blend | 6.5B | 10.48% | 9.07% | 10.3 |
| RBC Canadian Dividend Fund O | Canadian Equity Large Cap | 6B | -9.38% | 0.90% | 3.66% |
| Mawer International Equity Series O | Global Equity Large Cap | 5.5B | 5.89% | 4.82% |
Best mid-/small-market cap mutual funds
Mid- and small-cap mutual funds offer greater growth potential. But with greater growth potential comes greater risk: since the companies are not yet established, they could easily fail.
| Fund Name | Description | Net Assets | 1 Yr Return | 3 Yr Return | 5 Yr Return |
|---|---|---|---|---|---|
| EdgePoint Global Portfolio Series F | Global Equity Mid/Small Cap | 3B | -10.78% | 1.03% | 4.83% |
| EdgePoint Global Portfolio Series A | Global Equity Mid/Small Cap | 2.5B | -11.79% | -0.11% | 3.64% |
| Mawer Global Small Cap Series O | Global Equity Mid/Small Cap | 2B | 8.96% | 9.90% | 11.07% |
| Mackenzie US Mid Cap Growth Cl F | US Equity Mid Cap | 1B | 1.59% | 9.27% | 10.60% |
| Mawer New Canada Series O | Canadian Equity Mid/Small Cap | 1B | 5.36% | 4.43% |
Best emerging market mutual funds
The emerging markets offer high risk and a potentially high reward because they invest in countries that are still developing infrastructure and financial markets. Brazil, Russia, India, and China are popular destinations for emerging market mutual funds. Not only should these be very long term holds (as should, arguably, all investments) you must accept a certain level of volatility.
| Fund Name | Description | Net Assets | 1 Yr Return | 3 Yr Return | 5 Yr Return |
|---|---|---|---|---|---|
| RBC Emerging Markets Equity Fund O | Global Emerging Markets Equity | 4B | -3.82% | 2.09% | 5.08% |
| Fidelity Emerging Mkts Portfolio Sr O | Global Emerging Markets Equity | 2B | 5.54% | 6% | 7.93% |
| BlueBay Emerging Markets Corp Bd O | Emerging Markets Fixed Income | 1.5B | 5.66% | 4.47% | 6.76% |
Learn More: mutual funds vs. ETFs
Exchange-traded funds (ETFs) and mutual funds are related but different. The mutual fund industry experienced its first major competition when ETFs launched in Canada. Vanguard, one of the most in-demand and lowest-cost ETF companies, entered the Canadian market in 2011, and since then sales of ETFs have outpaced those of mutual funds.
Traditional ETFs are passively managed and don’t seek to beat the market. Instead, they hold the same basket of securities as the index they’re following and use that index as a benchmark to measure their performance. Matching the benchmark performance is the goal. Most traditional ETFs charge between 0.06% to 0.25% — two percentage points lower than most mutual funds.
And there’s not much difference among funds. In fact, many of the most popular equity, dividend, and balanced mutual funds in Canada have identical top 10 holdings.
Despite the lower fees and variety, ETFs have far fewer assets under management than mutual funds. Canada’s ETF industry had about $352.2 billion AUM in 2022 compared to the $2 trillion stashed in mutual funds. One reason is because mutual funds have been around for so much longer.
But the bigger reason is that most Canadians still walk into a neighbourhood branch of one of the big five banks when they’re looking to invest. The investment “advisors” at these banks get a commission from selling mutual funds and are often prohibited from selling ETFs because they are licensed by the Mutual Fund Dealers Association. The rest are accredited through the Investment Industry Regulatory Industry of Canada and are allowed to sell ETFs and individual stocks but have a conflict of interest because these products rarely earn them a commission.
While the banks title these people “advisors,” they are, in fact, salespeople. They have no fiduciary responsibility to their clients and are encouraged to sell in-house financial products. We’d encourage you to check out ETFs — and to absolutely avoid those big banks. We’d also encourage you to consider managed investing, which can be a great way for someone new to investing to take advantage of expert insight.
Last Updated June 14, 2022
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