3 funds to get your RRSP started

If you’re like many people, you’ve rushed into your bank near the end of February and put as much as you could manage into an RRSP.

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The clock is ticking down. March 1, 2022, is the deadline for contributing to your RRSP for the 2021 tax year.

After 2019’s 19-per-cent gain in Canadian stock markets, and similar gains in average Canadian equity mutual funds, it was easy to jump into mutual funds in January and early February of 2020. That’s exactly what many people did. But in late February and March of that year the stock market crash occurred, causing many to question what they had done. Some, no doubt, decided to get out of funds, accept their losses, and settle for GICs, even though these securities were offering two per cent or less on five-year terms.

We think that if these same investors had approached mutual-fund markets with more care, they may have remained in the stock market and reaped the benefit of the subsequent stock-market recovery.

Because volatility can be unsettling to many new investors, we’ve picked three conservative, stable funds. But these funds still show better-than-average long-term records of growth, plus other factors attractive for new investors.

■ Beutel Goodman North American Focus Equity Fund (Fund code: BTG870 (FE)) is one of the Very Conservative Canadian Equity funds in our monthly Planning Guide. The fund offers a portfolio concentrated in Canadian and US stocks that generate substantial free cash flow.

The fund holds 59 per cent of its portfolio in Canadian equities, 38 per cent in US equities and three per cent in cash. Over five years, it has returned an average annual 12.2 per cent, ranking in the top quartile of the Canadian focused equity category.

The fund has a front-end sales commission, a management expense ratio, or MER, of 1.51 per cent, and requires a minimum initial investment of $5,000.

■ Scotia Canadian Dividend Fund (Fund code: BNS385 (NL)) offers a conservative portfolio and volatility similar to the previous fund. It belongs to the Canadian Dividend Funds category of our Planning Guide, and we consider it a Very Conservative fund.

Scotia Canadian Dividend has a 10-year compound annual growth rate of 10.1 per cent, ranking it in the top quartile of the Canadian dividend and income equity category.

It’s a no-load fund, has an MER of 1.74 per cent and requires a minimum initial investment of just $500. You can invest in the fund at any branch of Scotiabank, making it one of the most convenient funds available.

■ We include Capital Group Global Equity Fund (Fund code: CIF843 (FE)) in the Multi Country Stock Funds category section of our Planning Guide. It invests primarily in common stocks, including growth stocks, on a global basis.

The fund is about as volatile as the others discussed on this page, but also has higher past returns. Its 10-year compound annual growth rate of 15.1 per cent ranks in the top quartile of the global equity category.

The fund carries a front-end charge, has a low MER of 1.92 per cent and a minimum investment of $500.

We recommend these three funds as excellent places to start your RRSP investing in equity mutual funds. They all have conservative portfolios and low volatility—characteristics that should retain your confidence through good markets and bad. They also have management expense ratios that are less than two per cent.

This is an edited version of an article that was originally published for subscribers in the January 21, 2022 issue of Money Reporter. You can profit from the award-winning advice subscribers receive regularly in Money Reporter.

Money Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846

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