Morningstar’s Top Performing Stock Funds of Q3

It was a strong quarter for major stock markets, with Canadian stocks showing solid gains thanks to good news on inflation prospects and continuing interest rate cuts from the Bank of Canada.

To see which stock mutual funds and exchange-traded funds fared the best in the third quarter, we performed two screens in Morningstar Direct. First, we screened Canadian-domiciled funds within Morningstar’s Canada equity category. We then screened for Canadian-domiciled funds in the global equity category. Here were the results:

Canadian Equity Top Performers

MM Fund
Canada Life Canadian Value Fund
Guardian Canadian Focused Equity Fund
BMO MSCI Canada Value Index ETF
DFA Canadian Vector Equity Fund

Global Equity Top Performers

Canada Life Global All Cap Equity Fund
TD Active Global Enhanced Dividend ETF
GreensKeeper Value Fund
Dynamic Power Global Growth Class
BMO Global Innovators Fund

Canadian Fund Performance

The Morningstar Canada Index has returned a solid 17.44% in the year to date. Canadian equity funds have gained 15.75% this year through Sept. 30, slightly lagging the market returns.

Canadian equity funds have on average returned 25.39% over the last 12 months. On an annualized rate, these funds have returned 8.2% over the last three years and 9.7% over the last five years. Meanwhile, the Canada Index has returned 27.91% over the last 12 months, 9.14% per year for the last three years, and 11.12% annualized for the last five years. Meanwhile, global equity funds have on average returned 28.42% over the last 12 months. On an annualized rate, global equity funds have returned 6.15% over the last three years and 9.96% over the last five years.

Screening for the Top-Performing Funds

First, we focused on Canadian funds that invest in global equities, selecting the top five based on the highest quarter-to-date returns. Next, we filtered for funds specifically investing in Canadian equities and picked the top five with the highest quarter-to-date returns. We picked funds with at least C$25 million.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among a fund’s share classes.

What Are Canadian Equity Funds?

Canada equity funds invest principally in the equities of Canadian companies. They invest at least 75% of their total assets in equities, and at least 75% of those assets in Canadian equities.

Canadian Equity Top Performers

MM Fund

The C$79.7 million MM Fund, which falls into the Canadian equity category, rose 31.87% over the past year. Over the past three years, the fund is up 10.27%. Over the past five years, it’s climbed 17.66%.

Canada Life Canadian Value Fund

The actively managed Canada Life Canadian Value Fund gained 23.03% over the past year, underperforming the average fund in the Canadian equity category, which rose 27.95%. The fund placed in the 93rd percentile for performance and lagged its benchmark, the S&P/TSX Composite Index, by 8.01 percentage points. The C$130.2 million fund has gained 11.74% over the past three years, while the average fund in its category is up 8.99%. The Canada Life fund was launched in May 2020.

Guardian Canadian Focused Equity Fund

The C$82.7 million Guardian Canadian Focused Equity Fund rose 43.88% over the past year. The gain on the actively managed fund beat the 27.95% gain on the average fund in the Canadian equity category, leaving it in the 1st percentile for performance. The fund beat its benchmark, the S&P/TSX Capped Composite Index, by 12.84 percentage points. Over the past three years, the fund rose 18.48%, while the average fund in its category rose 8.99%. Over the past five years, the fund has climbed 13.32%, compared with the 10.13% gain for the category.

BMO MSCI Canada Value Index ETF

The C$58.2 million BMO MSCI Canada Value Index ETF, which falls in the Canadian equity category, rose 23.82% over the past year. Over the past three years, the fund is up 12.33%. Over the past five years, it’s climbed 12.17%.

DFA Canadian Vector Equity Fund

The actively managed DFA Canadian Vector Equity Fund gained 30.9% over the past year, outperforming the average fund in the Canadian equity category, which rose 27.95%. The fund placed in the 17th percentile and performed roughly in line with its benchmark, the S&P/TSX Composite Index. The C$1.2 billion fund has gained 13.55% over the past three years, while the average fund in its category is up 8.99%. Over the past five years, the fund has climbed 14.63%, compared with the 10.13% gain for the category.

What Are Global Equity Funds?

Global equity portfolios invest in companies domiciled in developed countries throughout the world. This category encompasses portfolios that focus on stocks in the top 70% of the capitalization of the representative regional equity market, or portfolios that focus on stocks in the mid-cap and small-cap range.

Global Equity Top Performers

Canada Life Global All Cap Equity Fund

The C$337.3 million Canada Life Global All Cap Equity Fund, which falls into the global equity category, rose 23.91% over the past year. Over the past three years, the fund is up 9.09%. Over the past five years, it’s climbed 9.17%.

TD Active Global Enhanced Dividend ETF

The C$844 million TD Active Global Enhanced Dividend ETF, which falls into the global equity category, rose 41.71% over the past year. The fund was launched in March 2022.

GreensKeeper Value Fund

The C$60.9 million GreensKeeper Value Fund, which falls into the global equity category, rose 24.36% over the past year. Over the past three years, the fund is up 10.31%. Over the past five years, it has climbed 10.35%.

Dynamic Power Global Growth Class

The C$2.2 billion Dynamic Power Global Growth Class, which falls into the global equity category, rose 30.46% over the past year. Over the past three years, the fund is down 10.55%. Over the past five years, it has climbed 8.43%.

BMO Global Innovators Fund

The C$269.5 million BMO Global Innovators Fund, which falls into the global equity category, rose 34.33% over the past year. The fund was launched in November 2022.

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