26 Best Mutual Funds in Canada With Competitive Returns 2022

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Want to invest in a mutual fund and wondering what the best mutual funds in Canada is? Then this post is for you. 

With broad diversification, shared benefits/risks and professional active management, it’s obvious why mutual funds continue to attract so many investors in Canada.

In this post, I present the best performing mutual funds in Canada with relatively low fees across different risk levels. We’ll also provide some tips on how to choose the right mutual fund for your needs.

So whether you’re just starting out with investing or you’re looking for a more conservative option, read on for the best mutual funds in Canada!


Best Performing Mutual Funds in Canada

Mutual funds in Canada cut across different investment objectives and risk levels. In this compilation, we are going to explore the best performing mutual funds in Canada in the following categories:

  • Fixed income funds
  • Conservative funds
  • Balanced funds
  • Small/mid-market cap funds
  • Large market cap funds
  • Emerging market funds
  • Real estate funds

After reading this review, you will easily identify the best mutual fund that suits your needs in Canada. Let’s get started!

Best Fixed Income Mutual Funds in Canada

Fixed income or bond mutual funds are income-oriented funds that are tailored to investors with low-risk profiles.

Whether you’re looking for a short-term or long-term stable income, consider the following best fixed income mutual funds in Canada.

ProfileRBC Bond Fund – ORBC Global Corporate Bond Fond – OTD Canadian Bond Fund – DTD Canadian Core Plus Bond – IPH&N Bond Fund – O
Inception DateSeptember 5, 2006December 31, 2007October 20, 2015September 4, 2007October 31, 2002
Net Assets$22,797.71 million$12,709.41 million$11640.16 million$13584.41 million$9,473.60 million
Minimum InvestmentVariableVariable$100$100Variable
MER0.03%0.02%0.88%1.35%0.02%
1-Year Return-9.5%-11.4%-10.10%-10.34%-8.4%
Capital Gains Distribution FrequencyAnnuallyAnnuallyQuarterlyAnnuallyQuarterly

Best Conservative Mutual Funds in Canada

If you’re looking for a low-risk fund that invests in debt and equity securities, you can count on conservative mutual funds. The following are some of the best performing conservative mutual funds to choose from. 

ProfileRBC Select Very Conservative Portfolio – ARBC Select Conservative Portfolio – A
Inception DateMarch 9, 2009December 31, 1986
Net Assets$15,115.67 million$37,776.96 million
Minimum Investment$500$500
MER1.69%1.85%
1-Year Return-7.8%-7.6
Capital Gains Distribution FrequencyAnnuallyAnnually

Best Balanced Mutual Funds

Balanced mutual funds are tailored to investors with a medium risk level looking to invest in a portfolio with a mix of equity and bonds.

Below are some of the best balanced mutual funds to choose from in Canada.

ProfileTD Comfort Balanced Portfolio – FRBC Select Balanced Portfolio – A
Inception DateAugust 16, 2018December 31, 1986
Net Assets$9327.19 million$47,159.47 million
Minimum Investment$500$500
MER0.94%1.95%
1-Year Return-5.89%-8.8%
Capital Gains Distribution FrequencyQuarterlyAnnually

Related: Best Balanced ETFs in Canada

Best Small/Mid-Market Cap Mutual Funds in Canada

If you want to take the advantage of less established or smaller companies with lots of upside, consider small/mid-market cap mutual funds. Since these companies don’t have established track records, you need to have an above-average risk level to invest in them. 

However, the major benefit of existing in small/mid market cap mutual funds is that you may gain high returns if the companies perform well.

The following are some of the best small/mid-market cap mutual funds to consider.

ProfileMackenzie US Mid Cap Growth Cl – FMawer Global Small Cap Series – AMawer New Canada Series – AEdgePoint Global Portfolio Series – AEdgePoint Global Portfolio Series – F
Inception DateJanuary 2003October 2, 2007January 15, 1988November 17, 2008November 17, 2008
Net Assets$3.6 billion (all series)$3,074.0 million$1,420.5 million$7.7 billion$10 billion
Minimum Investment$500$500$20,000$20,000
Management Fee0.80%N/AN/A1.80%1.80%
MER1.05%1.77%1.34%2.11%2.11%
1-Year Return-8.1%-23.2%-18.4%
Capital Gains Distribution FrequencyAnnuallyAnnuallyAnnuallyAnnuallyAnnually

Best Large Market Cap Mutual Funds in Canada

Unlike small/mid-market cap mutual funds, large-cap mutual funds invest in large-size companies with established track records.

Though the potential of large-size companies is generally limited, you still need to have a medium-high risk tolerance to invest in large-cap mutual funds.

If you’re sure you can tolerate the risk, check out some of the best large-cap mutual funds in Canada below:

ProfilePH&N US Multi-Style All-Cap Equity Fund – OMawer International Equity Series – ARBC Canadian Dividend Fund – ARBC Canadian Dividend Fund – ORBC European Equity Fund – O
Inception DateJune 30, 2010November 6, 1987January 31, 1993September 5, 2006December 31, 2007
Net Assets$8,709.63 million
$730 million
$20,420.16 million$20,420.16 million$6,729.92 million
Minimum InvestmentVariable$500$500VariableVariable
Management FeeN/AN/A1.50%N/AN/A
MER0.06%1.40%1.760.02%0.02%
1-Year Return-2.4%-21.7%7.1%9.0%-13.7%
Capital Gains Distribution FrequencyAnnuallyAnnuallyAnnuallyAnnuallyAnnually

Best Emerging Market Mutual Funds

Emerging market mutual funds invest in developing countries which include Russia, China, India and Brazil. While these mutual funds tend to have a high-risk level, you can expect a great deal of returns.  

Below are some of the best emerging market mutual funds to choose from. 

ProfileVanguard Emerging Markets Select Stock FundRBC Emerging Markets Equity Fund – ABlueBay Emerging Markets Corporate Bond – OFidelity Emerging Markets Portfolio – A
Inception DateDecember 23, 2009February 27, 2017December 08, 1994
Net Assets$732.2 million$5,653.72 million$1,122.64 million$3.9 billion
Minimum Investment$3,000$500VariableNegotiable
Management FeeN/A1.85%N/AN/A
MER0.84%2.22%0.112.51%
1-Year Return-21.96%-17.1%-11.6%-22.52%
Capital Gains Distribution FrequencyAnnuallyAnnuallyAnnuallyAnnually

Best Real Estate Mutual Funds

If you’re looking for a mix of growth and income return aside from stocks and bonds, consider real estate mutual funds. However, you need to have a medium-high risk tolerance to invest in real estate mutual funds. 

The following are some of the best real estate mutual funds to consider in Canada.

ProfileScotia Private Real Estate Income Pool – MRussell Inv Global Real Estate Pool – FCI Global REIT Fund – A
Inception DateNovember 26, 2012January 1, 2013December 24, 1997
Net Assets$4.6+ million$35.92 million$774.92 million
Minimum Investment$250,000N/A$500
Management FeeN/AN/A1.90%
MER0.25%2.33%
1-Year Return-8.80%
Capital Gains Distribution FrequencyMonthlyMonthly

Related: Best Real Estate Crowdfunding Websites in Canada


What is a Mutual Fund?

A mutual fund is an investment fund that pools money from many investors to invest in a variety of securities. Mutual funds are managed by professional money managers, who attempt to produce capital gains and/or income for the fund’s investors.

There are many different types of mutual funds available, which can be categorized based on their investment objectives. For example, there are funds that focus on stocks, bonds, or a mix of both. There are also index funds, which track a specific market index such as the S&P 500.

Why invest in mutual funds?

Mutual funds offer a number of advantages for investors.

First of all, they provide diversification since they allow you to invest in a variety of securities within one fund. This can help to mitigate risk since you’re not putting all your eggs in one basket.

Additionally, mutual funds are a relatively easier way to invest and build a diversified portfolio quickly compared to buying individual stocks. The professional management and guidance is another plus.


5 Major Types of Mutual Funds in Canada

There are different types of mutual funds in Canada with varying objectives, allocations, risk levels and returns. The following are the five major types of mutual funds you need to know.

1. Equity Mutual Funds

Equity mutual funds refer to portfolios with equity or stock-dominated allocations. The allocations usually target particular companies and markets. 

For example, some equity funds target Canadian, US, or international stocks. They can also target small-mid or large-sized companies.

While equity mutual funds often have high risk, they provide some of the highest returns. 

2. Bond Mutual Funds

Bond or fixed income mutual funds provide short-long-term income by investing in bonds. This could be government bonds, corporate bonds, aggregate bonds, etc.

If you have a low-risk tolerance and are looking for a long-term investment vehicle, you may find this type of mutual fund suitable because of its low volatility.

Related: 10 Safe Investments With High Returns in Canada

3. Balanced Mutual Funds

A balanced mutual fund invests in both stocks and bonds in one portfolio. Like other balanced portfolios, balanced mutual funds usually target 50% stock allocation and 50% bond allocation (60% in equities and 40% in bonds are also common). 

With this asset allocation, you can expect an above-average investment return with a medium risk level.  

4. Index Funds

An index fund is designed to track the performance of a given market index. It could invest in stocks or bonds based on the targeted market index.

Unlike other mutual funds that are managed actively, index mutual funds are managed passively. 

5. Money Market Mutual Funds

Money market mutual funds are fixed-income-based mutual funds with low-risk levels that are designed to provide high liquidity on cash/cash equivalents and debt securities.

Due to their short maturities and low credit risk, money market mutual funds are one of the best short-term investment vehicles and are perfect for investors with short-term financial goals.


What are the Pros and Cons of Mutual Funds?

If you’re just starting, it’s essential you know the good and ugly sides of mutual funds before investing. Let’s jump in.

Pros of Mutual Funds

  • Shared benefits/risks: Since you’re not investing in the mutual fund alone, you will get a proportional benefit when the fund performs well and a proportional loss when the fund underperforms. 
  • Diversification: Mutual funds invest across different securities, markets and companies towards maximizing returns.
  • Professional management: Since a professional portfolio manager will actively invest and manage your funds, you can focus on other areas of your life. 

Cons of Mutual Funds

  • Extremely high fees: Compared to ETFs, mutual funds have extremely high management fees and management expense ratios (MERs) that may undermine your investment returns.
  • Underperformance: Due to the high fees and active management, mutual funds often underperform the market.

How Do I Choose a Mutual Fund in Canada?

From the above review of the best mutual funds in Canada, you can see how the funds differ on various grounds. As a result, it may be difficult to determine the one that suits your needs.

But like any other investment vehicle, you need to first identify your risk tolerance before determining which mutual funds to choose. 

Once you identify your risk tolerance, you can determine your perfect mutual fund by considering the following factors: 

1. Investment Objective

What are you investing for? Are you investing to fund a mortgage? Home improvement? Debt payment? Retirement? Or children’s education?

The interesting part is that whatever your investment objective is, there’s a tailored mutual fund for you. All you need is to determine your needs and go for them.

2. Minimum Investment

As highlighted above, mutual funds have varying minimum investment requirements in Canada. If you want to start investing with little amounts (say less than $1,000), you’ll find several mutual funds that meet your needs.

Since the minimum investment doesn’t impact the portfolio performance, you can’t go wrong with any of the above funds that suit your income level.

3. Fees

It’s well known that mutual funds are extremely expensive compared to other investment vehicles. However, not all mutual funds are expensive as you can see from the above table.

Overall, choosing a mutual fund with a low MER and management fee and an history of decent returns will help you maximize your investment gains. 

4. Fund Performance

Even though past portfolio performance is not a guarantee for future returns, it can be a hint about the likely outcome of your investment.

This makes it essential to know the performance of your preferred fund starting from its 1-year returns to its total returns since inception. 

5. Distribution Frequency

As highlighted from the foregoing review, different mutual funds have different distribution frequencies in Canada. 

Depending on your investment objective and situation, you may want to receive dividends monthly, quarterly or annually.


Mutual Funds Alternatives

There are a few alternatives to mutual funds that you may want to consider, depending on your investment objectives.

1. Exchange-Traded Funds (ETFs)

Exchange-traded funds (ETFs) are similar to mutual funds in that they offer diversification and professional management. However, ETFs tend to be more cost-effective than mutual funds.

No matter your risk tolerance or investment goal, there are several top ETFs to choose from. For even more diversification, you can choose an asset allocation ETF that holds different asset classes and are diversified worldwide.

Check here for the best asset allocation ETFs in Canada.

2. Robo-advisors

Robo-advisors are a newer type of investment that uses technology to provide automated, low-cost investment management.

Like mutual funds, you simply move your funds to the robo-advisor and your money will be invested in a portfolio that matches your risk tolerance.

Some of the best robo-advisors in Canada include Wealthsimple Invest, Questwealth Portfolios and Justwealth.

3. Individual stocks and bonds

If you’re comfortable with more risk, you may want to consider investing in individual stocks or bonds instead of (or in addition to) mutual funds.

Unlike the 2 other mutual funds alternatives above, managing a DIY portfolio of individual stocks can be stressful and difficult to manage, however it can also be cheaper if you use a commission-free brokerage.

Are Mutual Funds Safe?

Mutual funds are safe as investment vehicles. However, the safety of your funds depends on where and how your funds are invested.

To this end, it’s essential to invest in a regulated mutual fund company with expert portfolio managers. One of the major regulators of mutual fund managers in Canada is the Investment Industry Regulatory Organization of Canada (IIROC).

That said, your investment will still be subject to market volatility depending on the portfolio risk and the assets held by the mutual fund. Therefore, you should invest according to your risk appetite.

Are ETFs better than Mutual Funds?

The debate on ETF vs mutual funds has been on for a long time between passive and active investors. 

Passive investors believe that ETFs are better since they are low-cost, highly liquid, passively managed in general, and often outperform the active investors.

On the other hand, active investors believe that mutual funds are better because they are highly diversified and managed actively by professional portfolio managers.

Overall, if you want the same diversification that you get with mutual funds but with cheaper fees, I recommend ETFs over mutual funds.


Some FAQs on the Best Performing Mutual Funds in Canada

Is Mutual Fund a good investment in Canada?

A mutual fund is a good investment for investors looking to gain broader diversification with a small amount. Newbie investors with limited knowledge of the stock market can also invest in mutual funds and have everything done by a professional portfolio manager.
However, mutual funds may not be suitable for investors looking for a low-cost passive portfolio.

Do mutual funds pay dividends?

Yes. Mutual funds pay investors dividends according to the distribution schedule of the fund manager. Depending on the mutual fund, you may receive the dividends monthly, quarterly or annually.

Is it better to buy stocks or mutual funds?

You can’t go wrong with either stocks or mutual funds depending on your risk tolerance and investment objective. However, buying an individual stock is not only costly but generally riskier compared to mutual funds. 

RELATED: Best Dividend ETFs in Canada


The Bottom Line on the Best Mutual Funds in Canada

Mutual funds are one the oldest investment vehicles in Canada that continue to attract investors with different risk levels and investment objectives.

If you’re comfortable with the active investing strategy of mutual funds without minding the costs, the best thing you want to do is to choose the perfect portfolio. The perfect portfolio here means a mutual fund that aligns with your risk tolerance, investment objective, minimum investment budget, and distribution frequency.

With this in mind, I hope you can now identify the perfect mutual fund for your needs based on the above compilation. If you enjoy reading this review, check out our blog section for more related information about the best investment solutions in Canada, such as: 

Simon is a CPA by day and a Personal Finance Blogger by night. With over a decade experience in financial services, he's passionate about personal finance, investing and helping people take control of their financial life.

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