What are we looking for?
Balanced DIY mutual funds and ETFs for RRSP season
The screen
March 1 marks this year’s RRSP contribution deadline for Canadians. For seasoned investors with an established portfolio, it is a great time to rebalance the portfolio back to target weights with the help of the additional cash injection. However, for new investors, managing one’s own RRSP can prove to be a daunting task given the abundant choice of investment options available. For those who don’t have complicated financial situations or are just starting out, I’ve noted in the past that one of the best set-ups for new investors in Canada is the combination of a discount brokerage account (many of which don’t charge commissions for trading ETFs or mutual funds) and holding a balanced fund (sometimes called an “all-in-one”). Balanced funds offer the convenience of owning a single fund that will regularly rebalance itself, while providing access to a well-diversified portfolio spanning multiple asset classes and regions. Moreover, buying these products through discount brokerage channels saves you fees on advice and distribution, which over time can be significant. To help with ideas in this space, I use Morningstar Direct to screen for balanced Canadian-domiciled ETFs and DIY mutual funds that meet two criteria:
- A four- or five-star Morningstar Rating for Funds, indicating that the fund has historically outperformed respective category peers after fees, on a risk-adjusted basis. Our data shows that although the star ratings are backward-looking, funds that have received five stars as a group outperform those that have received four stars, three stars, etc., in periods after receiving the rating. In other words, it’s more likely that a fund manager with a track record of outperforming peers will continue to outperform in the future, as compared with those that have historically underperformed peers.
- Have received a Morningstar Quantitative Rating of gold, silver, or bronze, isolating funds that Morningstar believes will produce excess after-fee returns in the future, based on our analysis of people (quality of the management team), parent (stewardship of the fund company) and process (robustness of investment decision-making).
What we found
22 top ranked ETFs and funds
| Name | Ticker | Morningstar Category | MER (%) | Morningstar Rating for Funds | Morningstar Quantitative Rating | Total Ret YTD (%) | Total Ret 1 Yr (%) | Total Ret Annlzd 3 Yr (%) | Total Ret Annlzd 5 Yr (%) | Total Ret Annlzd 10 Yr (%) | Total Ret Annlzd 15 Yr (%) | Inception Date |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Exemplar Growth and Income Ser ETF | EGIF-T | Canadian Equity Balanced | 1.08 | 4 Stars | Bronze | -0.89 | -7.41 | 4.00 | 2018-07-23 | |||
| TD Dividend Income - D | Canadian Equity Balanced | 1.20 | 4 Stars | Bronze | 6.04 | -3.55 | 6.02 | 6.99 | 2015-10-20 | |||
| Leith Wheeler Income Advantage Series B | Canadian Fixed Income Balanced | 0.85 | 4 Stars | Bronze | 4.36 | -2.52 | 3.42 | 3.83 | 4.57 | 2010-12-21 | ||
| RBC Monthly Income Fund D | Canadian Neutral Balanced | 0.88 | 4 Stars | Gold | 3.50 | -3.18 | 2.93 | 5.11 | 5.06 | 5.11 | 2007-07-03 | |
| PH&N Monthly Income Fund D | Canadian Neutral Balanced | 1.09 | 4 Stars | Silver | 5.00 | -0.49 | 5.82 | 6.56 | 5.64 | 2009-12-29 | ||
| RBC Managed Payout Soln-Enhanced Plu D | Canadian Neutral Balanced | 1.13 | 5 Stars | Silver | 4.42 | -1.53 | 5.17 | 6.56 | 6.58 | 5.52 | 2007-07-03 | |
| RBC Balanced Fund D | Canadian Neutral Balanced | 1.33 | 4 Stars | Silver | 4.49 | -3.20 | 3.56 | 5.31 | 5.86 | 4.65 | 2007-07-03 | |
| iShares Core Growth ETF Portfolio | XGRO-T | Global Equity Balanced | 0.20 | 4 Stars | Bronze | 5.78 | -1.71 | 4.99 | 6.38 | 6.99 | 4.88 | 2007-06-21 |
| Vanguard Growth ETF Portfolio | VGRO-T | Global Equity Balanced | 0.24 | 4 Stars | Silver | 5.78 | -2.23 | 4.76 | 6.66 | 2018-01-25 | ||
| PH&N Balanced Fund D | Global Equity Balanced | 0.88 | 4 Stars | Gold | 3.95 | -3.87 | 4.10 | 6.01 | 7.27 | 5.82 | 1991-09-18 | |
| RBC Vision Balanced Fund DZ | Global Equity Balanced | 0.93 | 4 Stars | Silver | 3.82 | -6.42 | 3.11 | 5.99 | 2017-05-19 | |||
| Mawer Global Balanced A | Global Equity Balanced | 1.08 | 4 Stars | Bronze* | 3.23 | -1.63 | 2.75 | 6.08 | 2013-07-02 | |||
| Leith Wheeler Balanced Series B | Global Equity Balanced | 1.16 | 4 Stars | Bronze | 4.51 | -0.90 | 4.84 | 5.09 | 6.52 | 5.49 | 1987-09-22 | |
| RBC Balanced Growth & Income D | Global Equity Balanced | 1.24 | 4 Stars | Silver | 3.97 | -2.78 | 3.79 | 5.27 | 2013-08-12 | |||
| iShares Core Balanced ETF Portfolio | XBAL-T | Global Neutral Balanced | 0.20 | 4 Stars | Bronze | 4.66 | -2.80 | 3.23 | 5.77 | 5.13 | 5.30 | 2007-06-21 |
| Vanguard Balanced ETF Portfolio | VBAL-T | Global Neutral Balanced | 0.24 | 4 Stars | Silver | 4.74 | -3.39 | 2.84 | 5.12 | 2018-01-25 | ||
| Mawer Tax Effective Balanced A | Global Neutral Balanced | 0.89 | 4 Stars | Silver | 3.38 | -3.36 | 1.77 | 4.78 | 7.48 | 6.86 | 1988-01-08 | |
| Mawer Balanced A | Global Neutral Balanced | 0.90 | 4 Stars | Bronze* | 3.42 | -3.47 | 1.77 | 4.79 | 7.52 | 6.90 | 1988-02-12 | |
| RBC U.S. Monthly Income Fund D | Global Neutral Balanced | 0.94 | 5 Stars | Gold | 1.69 | -2.71 | 2.76 | 5.99 | 8.67 | 7.63 | 2007-07-03 | |
| RBC Global Balanced Fund D | Global Neutral Balanced | 1.32 | 4 Stars | Silver | 4.26 | -3.82 | 2.90 | 5.06 | 6.29 | 4.72 | 2007-07-03 | |
| TD Tactical Monthly Income Ser D | Tactical Balanced | 1.21 | 4 Stars | Bronze | 3.30 | -4.02 | 3.20 | 5.67 | 2015-02-10 | |||
| Canoe Asset Allocation Portfolio Cl D | Tactical Balanced | 1.79 | 5 Stars | Silver | 1.84 | 2.16 | 12.00 | 2019-03-08 |
| Source: Morningstar Direct, Data as of Feb 14, 2023 |
* Denotes analyst rating
The 22 ETFs and DIY mutual funds that met the above requirements are listed in the accompanying table, alongside their fees, categories, trailing performance, ratings and inception dates. The list is sorted first on the category, which should provide an indication of what is held in the fund (noting importantly that younger investors or those with long investment time horizons can handle more equity in their portfolio), then by management expense ratio, from lowest to highest. For those that are open to a “go-anywhere” portfolio (i.e. a dynamic mix of stocks and bonds, which can change at the discretion of the portfolio manager of the fund), the last two funds on the list would provide this effect, whereas all others on the list will have a stated static mix of stocks and bonds.
This article does not constitute financial advice. Investors are encouraged to conduct their own independent research before purchasing any of the investments listed here.
Ian Tam, CFA, is director of investment research for Morningstar Canada.
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