Honor Roll 2008: Canada's best mutual funds

These days, when many Canadian mutual funds are basking in the glow of yet another year of double-digit returns, it's easy for novice investors to conclude that investing is simple. All you have to do to make money — or some it would seem — is to pick any fund with a good recent history and pour every dollar you have into it.

Unfortunately, history suggests that selecting a good fund isn't quite that simple. Sometimes the past will repeat itself — but usually it doesn't. Whether you're talking dotcom stocks, U.S. homebuilders or income trusts, investing trends rarely endure for more than a few years.

To distinguish a genuinely good mutual fund from a merely lucky fund, you need to drill down into a fund's results and kick out funds that are doing well simply because they made a big bet on a hot sector. You have to develop a system that can spot consistent performers that have the skill and the temperament to do well both in good times and in bad times.

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Canada's Best Mutual Funds 2008

Overview: Our annual guide to Canada's top funds
The Honor Roll (The complete list)
Canadian equity funds
U.S. equity funds
Canadian balanced funds
Global equity funds
Small cap funds
Canadian bond funds

Previous fund rankings: 2007 | 2006 | 2005 | 2004

How to use the tables

Any mutual fund listed in our ranking is a good buy, but some may be better for you than others. For instance, if you're investing outside an RRSP, pay particular attention to tax efficiency. This measures how much of the return on a fund has been lost to taxes on distributions. (Mutual funds that don't distribute cash don't lose anything and so are rated 100%.) In general, the higher this number, the better for taxable investors.

All investors should consider risk as well. Risk-adjusted return shows how much return each fund has achieved in proportion to its risk - again, the higher, the better. If you want to play it safe, look for funds with a high consistency rating (which shows the percentage of months in which a fund has performed better than its peers) and strong bear market performance (the best funds get As and so on down to Es). Overall ratings in each category go from one asterisk (poor) to five asterisks (excellent).

The fund performance tables can be emailed, printed out or downloaded into a spreadsheet. Funds can be ranked by any of the data categories simply by clicking on the column name. A second click on the same column name will reverse the order. Custom views can be created for selected data categories.

All figures are from Fundata Canada Inc. and FundScope Limited, as of October 2007.