When I evaluate mutual funds in Canada, I look for long-term stability, strong returns relative to peers, and fees that don’t eat away at gains. Unlike in the U.S., Canada’s mutual fund industry has traditionally been dominated by higher-fee actively managed funds. But that’s slowly changing, and there are now more options for investors seeking low-cost, diversified funds for growth, income, or capital preservation.
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How I Evaluate Canadian Mutual Funds
I base my selections on these core factors:
- Performance relative to category benchmarks
- Consistency over 5–10 years
- MER (Management Expense Ratio)
- Diversification
- Fit for long-term Canadian investors
I also pay attention to taxation and availability through Canadian brokerages or registered accounts like RRSPs and TFSAs. If you’re investing for retirement, I suggest choosing funds that do well within those tax-advantaged plans.
Here’s the basic formula I use to estimate long-term fund growth in a registered account like a TFSA or RRSP:
FV = P \left( \frac{(1 + r)^t - 1}{r} \right) \times (1 + r)Where:
- P is the annual contribution
- r is the average annual return (after fees)
- t is the investment period in years
If I contribute $6,000 annually to a TFSA and the fund earns 7% annually:
FV = 6000 \left( \frac{(1 + 0.07)^{30} - 1}{0.07} \right) \times 1.07 = 6000(94.46) \times 1.07 \approx 606,486Over 30 years, that’s over $600,000 tax-free. Picking the right funds makes that possible.
1. TD Canadian Index Fund – e Series (TDB900)
Type: Canadian Equity Index
MER: 0.33%
5-Year Return: ~7.6%
Min Investment: $100
This is one of the lowest-cost mutual funds available to Canadian retail investors. It tracks the S&P/TSX Composite Index, giving exposure to the largest publicly traded Canadian companies. It’s ideal for investors who want broad Canadian equity exposure without paying active management fees.
I like it as a core Canadian equity holding in a TFSA or RRSP. If you want an ETF equivalent, look at VCN.
2. RBC Canadian Dividend Fund (RBF266)
Type: Dividend Equity
MER: 1.03%
5-Year Return: ~8.4%
Min Investment: $500
This fund focuses on dividend-paying Canadian companies with strong fundamentals. While the MER is higher than index funds, the dividend focus provides reliable income and some downside protection.
I use it in income-oriented portfolios, especially for retirees drawing from RRSPs or taxable accounts.
3. RBC Canadian Index Fund (RBF556)
Type: Canadian Equity Index
MER: 0.66%
5-Year Return: ~7.3%
Min Investment: $500
This fund is similar to TD’s e-Series, but it’s more widely available in RBC accounts and registered plans. While the MER is higher than TDB900, it’s still lower than many actively managed Canadian equity funds.
4. Vanguard Balanced Fund Series A (VBN100)
Type: Balanced (60/40 Stocks/Bonds)
MER: 0.22%
5-Year Return: ~6.1%
Min Investment: $5,000
This all-in-one solution blends Canadian, U.S., and international equities with Canadian bonds. I often recommend it for investors who want a hands-off approach. The globally diversified allocation reduces risk while still offering solid returns.
It works especially well in a TFSA or RESP where simplicity is key.
5. Fidelity Canadian Asset Allocation Fund (FID701)
Type: Balanced / Asset Allocation
MER: 2.11%
5-Year Return: ~6.2%
Min Investment: $500
This fund actively allocates between stocks and bonds, adjusting based on market conditions. While the MER is high, the fund has outperformed peers during volatile markets. I include it for investors who want an active defense strategy.
6. TD U.S. Index Fund – e Series (TDB902)
Type: U.S. Equity Index
MER: 0.33%
5-Year Return: ~14.3% (CAD)
Min Investment: $100
I consider this fund a must-have for long-term growth. It tracks the S&P 500, offering exposure to high-performing U.S. companies. Because it’s CAD-hedged, it removes currency volatility for Canadian investors.
If you prefer no hedging, you can look at TDB904 instead.
7. BMO Monthly Income Fund (GGF51489)
Type: Income / Conservative Balanced
MER: 0.85%
5-Year Return: ~4.7%
Min Investment: $500
This fund aims to provide regular monthly income through dividends and bond interest. It’s suited for conservative investors or retirees who prioritize stable payouts over high growth.
8. CI Global Value Fund (CIG843)
Type: Global Equity Value
MER: 2.36%
5-Year Return: ~8.7%
Min Investment: $500
I include this for diversification beyond North America. It focuses on undervalued companies globally. The fund is actively managed and carries a higher fee, but it has performed well relative to global peers.
9. TD Global Equity Index Fund – e Series (TDB911)
Type: Global Equity Index
MER: 0.50%
5-Year Return: ~9.1%
Min Investment: $100
This fund provides broad global equity exposure, including developed and emerging markets. It’s a good core holding for investors who want worldwide diversification at low cost.
10. Mawer Balanced Fund (MAW104)
Type: Balanced
MER: 0.91%
5-Year Return: ~6.9%
Min Investment: $5,000
Mawer is one of the most respected independent fund managers in Canada. This fund holds a mix of Canadian, U.S., and international equities plus bonds. It has a strong long-term track record with disciplined management.
I often recommend it for RRSPs and long-term wealth-building.
Comparison Table: Key Metrics of Top Canadian Mutual Funds
| Fund | Category | MER | 5-Year Return | Ideal For |
|---|---|---|---|---|
| TDB900 | Canadian Equity Index | 0.33% | 7.6% | Long-term core |
| RBF266 | Canadian Dividend | 1.03% | 8.4% | Income-seekers |
| VBN100 | Balanced (60/40) | 0.22% | 6.1% | Beginners / set-and-forget |
| TDB902 | U.S. Index | 0.33% | 14.3% | Growth-focused investors |
| MAW104 | Balanced | 0.91% | 6.9% | Conservative long-term |
How I Use These Funds in Portfolios
Here are three sample allocations I use based on investor goals and risk:
Growth Portfolio (Aggressive – TFSA)
| Fund | Allocation |
|---|---|
| TDB900 | 25% |
| TDB902 | 30% |
| TDB911 | 20% |
| RBF266 | 15% |
| CIG843 | 10% |
Balanced Portfolio (RRSP)
| Fund | Allocation |
|---|---|
| VBN100 | 40% |
| TDB900 | 20% |
| TDB911 | 20% |
| VBT152 (TD Bond Index) | 20% |
Income Portfolio (Taxable or Retirement)
| Fund | Allocation |
|---|---|
| RBF266 | 30% |
| BMO Monthly Income | 30% |
| MAW104 | 20% |
| VBN100 | 20% |
Final Thoughts
The Canadian mutual fund landscape includes both high-fee active funds and low-cost index options. I lean toward low-fee index funds for most investors, but I make exceptions when active funds have shown strong long-term consistency.
