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Dale Jackson

Personal Finance Columnist, Payback Time


2017 was a good year to own a piece of the world. In Canadian dollars, the benchmark for global equities — the MSCI World Total Return Index — posted a 20-per-cent return.

If you chose to invest in global equities through a mutual fund, the outcome depends on who was managing your money. Returns ranged from 55.4 per cent to a paltry 1.5 per cent.

The top-performing global equity fund this year was DMP Power Global Growth from Dynamic Funds. It crushed the benchmark with a 55.4-per-cent return by taking a big stake in retail technology giants like Amazon (AMZN.O) and Alibaba (BABA.N). Over the past 10 years, it has managed to beat the benchmark consistently even after the annual management expense ratio (MER), which is currently 2.8 per cent.

The Renaissance Global Science & Technology fund posted a 33.4-per-cent return with a heavy technology weighting in companies including Facebook, Apple and Amazon. Over the past five years the CIBC-managed fund has returned an average 25.4 per cent each year compared with 18.4 per cent for the MSCI World Total Return Canadian Dollar Index. The MER is 3.02 per cent. That may seem high but quality management, on a global level, has its price.

RBC is one of Canada’s biggest global players and that’s why it can keep the MER for its global equity fund at 2.15 per cent. In 2017 the RBC Global Equity fund posted a 26-per-cent return with diversified stakes in financials and technology. Over the past three years it has posted a 15.4-per-cent average annual return compared with 13.3 per cent from the benchmark.

At the bottom of the global equity fund heap is the GWL Foreign Equity fund from Great-West Life Assurance and managed by Mackenzie Investments. While the index advanced by 20 per cent, it gained 1.5 per cent once you strip out the hefty 3.15-per-cent MER. It’s expensive because it is a segregated fund. That means it is an insurance product that guarantees against losses. To insure that protection the fund held 28 per cent of its $200 million in assets in cash as of the start of October.

Unsuspecting fund holders who assumed their money was being invested probably didn’t know that because mutual funds are only required to publish information after the fact.