Top 10 Performing Mutual Funds in Canada to Look at Now

Whether you are an experienced investor or starting on your investment journey, investing in mutual funds in Canada is a good strategy for accumulating wealth and securing a better financial future.

There’s an overwhelming number and variety in this type of investment. That’s why it can be difficult to pick out the ones that offer the most consistent and significant returns.

Wealth Professional provides you an updated list of the top-performing Canadian mutual funds for the year 2023. Here is a curated selection of funds that have consistently showed exceptional performance in their stability and returns. So, let’s dive into the list of top performers in Canada for 2023.

What are mutual funds in Canada?

First, a short primer on mutual funds: Canadian mutual funds are made up of stocks, bonds, and other assets, purchased with money pooled from a group of investors. It’s the fund manager’s job to look after this investment.

The main difference of funds in Canada from funds in other markets is that they’re more heavily regulated.

To illustrate, in the US, mutual funds are mostly overseen by the US Securities and Exchange Commission (US SEC).

In Canada, mutual funds are regulated by the Canadian Investment Regulatory Organization (CIRO), and by securities laws of provinces where the funds are issued.

Dealers who trade in mutual funds in Canada must also be registered and licensed with the appropriate securities regulator in their region or province.

The Top 10 mutual funds in Canada in 2023

1. CI Canadian Dividend Funds Series F

10-year annual return: 10.41%
Index 10-year annual return: 7.61%

This mutual fund is invested in both US and Canadian equities, with an 80% allocation of the fund in local stocks.

As of this writing, there are few mutual funds in Canada that can boast of outperforming other funds for 10 years and counting. CI Canadian Dividend Funds have surpassed their benchmark index, even after investors have paid 1.33% Management Expense Ratio or MER.

Interestingly, this fund has only 42 choice stocks; the average fund can have hundreds in its portfolio. This is a fund that’s been patiently built up with stocks from stellar companies for decades.

Considering the potential high returns for investors, all it takes to invest is a relatively small initial buy-in of $500.

2. Mackenzie Bluewater Canadian Balance Fund Series F

10-year annual return: 9.56%
Index 10-year annual return: 7.60%

This fund is composed of 60% stock and 40% fixed-income bonds from mostly Canadian companies. It also has a few international asset investments.

Owned by IG Wealth Management, this fund is managed by its subsidiary, Mackenzie Financial. Previously known as Investors Group, IG Wealth Management was ranked poorly by investors in the past. IG had a reputation for selling lackluster funds and charging high fees.

This fund has since grown to an impressive $5.4 billion in assets, and now gives considerably good returns. Its management fee now sits at a more investor-friendly 1%.

This turnaround in performance might be attributed to Mackenzie’s strategic changes, namely its appointments of two very experienced and capable portfolio managers. It pays to do a little homework to see if a fund is still worth investing in.

3. AGF Global Select Series F

10-year annual return: 16.49%
Index 10-year annual return: 11.53%

A global equity fund, AGF Global Select is made up of 50% of US assets, 2.7% Canadian assets, and the rest invested in the EU, Asia, and Latin America. This fund can provide investors with instant diversification.

Initially launched 23 years ago, this fund had an unimpressive start, shedding more than half its value during the bear market of 2002 to 2003. It also suffered setbacks in the 2008 financial crisis. It has rebounded since then to provide excellent returns.

AF Global Select now beats its benchmark index by almost 5% per year in the last 10 years. It continues to give solid returns, with more than $3 billion in assets. Its MER is at a comfortable 1.22% but larger investors can get a discount. The initial investment is only $500, and a minimum $25 for subsequent investments.

4. Blue Bay Emerging Markets Corporate Bond Fund

10-year annual return: 1.97%
Index 10-year annual return: 1.53%

As an asset manager based in London, Blue Bay focuses on managing European fixed-income debt. Recently acquired by Royal Bank of Canada, Blue Bay’s financial services were on the Canadian market for a decade before its acquisition.

At first glance, this fund may not appear very impressive since its return to the Canadian market, but it has performed rather well.

This fund charges only 0.92% as its MER, a third of its total returns. Having assets outside North America is also attractive to investors, providing a high degree of diversification.

5. Mawer Global Equity Fund

10-year annual return: 12.51%
Index 10-year annual return: 11.53%

Mawer is an independent asset manager based in Calgary. Its mandate is simple: to deliver solid long-term returns via investment portfolios of steady, seemingly unspectacular, unglamorous stocks. Its strategy is perfectly captured by its slogan: “Be Boring. Make Money.”

Investors will see from its fund facts that it’s chock-full of “boring” stocks from around the world, from companies that appear in everyday life. Its most notable holdings are Johnson & Johnson, Microsoft, and convenience store giant Alimentation Couche-Tard.

Most Canadian online brokerages offer the fund. Apart from its minimum initial investment of $500, another benefit is that it’s also RRSP and TFSA eligible.

Since its establishment in 2009, the Mawer Global Equity Fund has beaten other comparable equity funds over the last ten years, by approximately 1% per year after expenses. While there is no guarantee this historical annual outperformance will continue, its long history of good results still makes it a viable investment.

6. RBC Life Science and Technology Series F

10-year annual return: 18.82%
Index 10-year annual return: 15.07%

Many tech stocks benefit the most from a strong economy and increased optimism – that's why this fund is worth considering during good times. This could explain why the RBC Life Science and Technology Fund has surpassed its benchmark by almost 4% per year. That might not look like much, but over time this can add up to significant growth.

The fund has two caveats. It tends to perform much worse than safer investments when market sentiment turns negative. Also, its 0.94% MER eats up any dividends. These haven't hurt the fund’s long-term gains in the past.

Want to know more about mutual funds from Canada’s largest bank? Here’s everything you need to know about RBC mutual funds.

7. TD U.S. Mid-Cap Growth Fund Class F

10-year annual return: 14.63%
Index 10-year annual return: 13.36%

Upon closer inspection, investors will observe top holdings in boring, unfamiliar names like Hologic Inc., Ingersoll-Rand, and Textron Inc. However, even investors who are skilled and prefer to have actively managed funds can still learn a thing or two from this fund. The companies in it are usually underfollowed but make no mistake – this is fertile hunting ground for seasoned mutual fund managers.

Investors pay an elevated management fee for this expertise, with this fund charging a 1.13% MER. But that's acceptable, since investors can get good long-term value, with the fund consistently delivering returns higher than its benchmark.

You’ll only need $100 to begin investing in this fund, and it can easily be purchased through your online broker.

For an overview of what TD Bank offers in this area, read our article on TD mutual funds.

8. Dynamic Canadian Dividend Series I

10-year annual return: 10.77%
Index 10-year annual return: 7.89%

One of the best funds over the last ten years (and possibly more) has been the Dynamic Canadian Dividend Fund. This is a conservatively managed fund brimming with stocks of some of the best companies in Canada, including Toronto Dominion Bank, Power Corporation of Canada, and Enbridge.

This is a fund that’s designed to pay a generous dividend and it consistently delivers. The current yield is just shy of 5% and has a minuscule 0.08% MER, so much of its income finds its way into investors’ pockets.

9. North Growth Canadian Equity Fund Series F

10-year annual return: 11.52%
Index 10-year annual return: 4.85%

The North Growth Canadian Equity Fund follows a similar strategy of the PH&N fund (it’s #10 on this list). It runs a concentrated portfolio of small stocks that offer solid growth opportunities and trading at reasonable valuations. This strategy is very different from the top-heavy TSX Composite Index and can lead to massive outperformance.

This is a small fund, with just under $70M in assets and a 0.70% MER. Here’s a good reason why this fund outperforms its benchmark: the fund company requires all its fund managers to invest in their funds. This investor-friendly provision also ensures that fund managers work in their investors’ best interests!

10. PH&N Small Float Fund Series F

10-year annual return: 11.84%
Index 10-year annual return: 4.85%

This fund has posted nearly unheard-of returns since its creation in 2002, growing the portfolio by 10.1% annually. The fund uses a couple of different strategies to generate these amazing returns:

• it takes concentrated positions in top holdings, with approximately half the fund's assets in its top 10 holdings
• its index gives a significant weight towards larger names

Sounds like a great investment, but there’s a catch: this fund is reserved only for Royal Bank clients. Plus, the management fee is not a fixed rate. It’s a negotiated amount based on how much is invested.

What are the advantages of mutual funds?

There are several advantages mutual funds in Canada can offer investors, such as:

1. Diversification in a mutual fund is part of its nature and works to protect investors from risk. Since a mutual fund is a collection of different stocks, bonds, or other assets, any adverse event that affects one asset is cushioned by the others.  

2. Expert management is what investors can expect from the fund or portfolio managers. Their aim is to make sure that the fund is professionally managed while taking into account their clients’ budget, goals, and risk tolerance.

3. Low cost attracts more investors to Canadian mutual funds. By pooling assets and resources with more investors, transaction costs are much less than if a single investor dealt in securities.

4. Convenience when dealing in mutual funds is made greater with online brokerages. Investors can choose to reinvest their dividends back into the fund or forward the earnings to their RRSP or TFSAs.

Remember that investors aren’t limited to this list of top performers. There’s no rule that says you can’t use these funds with other mutual funds, index funds of those funds, or even growth stocks.

Here’s a video that mentions a few notable growth funds and stocks for 2023 that have the potential for significant earnings in the next 5 to 10 years. These suggestions are based on principles from John “Jack” Bogle’s Little Book of Common Sense Investing:

Are mutual funds a good investment in Canada?

The short answer is yes, but that largely depends on the individual investor’s or fund manager’s risk appetite, budget, and financial goals. If this investment instrument aligns well with all three criteria, then mutual funds are a good investment.

Another reason why mutual funds in Canada are a good investment is they do away with the risk and hassle of picking individual stocks and bonds. Simply choosing a mutual fund or funds can save a lot of time and energy. This is more efficient than researching individual stocks, then choosing which ones conform to the investors’ needs, then adding them to their portfolio.

There are many mutual funds in Canada to suit most any financial advisor’s or investor’s budget, investment objectives, and risk tolerance.

The key to finding the best mutual funds is to defer to the knowledge and expertise of more experienced professional fund managers and to stay updated on industry trends. One way to do that is to bookmark the Investments page for the latest news on mutual funds and other investment tools.

Did you like what you saw among the top mutual funds in Canada for 2023? Will you invest in them exclusively or add other funds to your portfolio? Let us know in the comments!