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Nexen Inc., $27.32, symbol NXY on Toronto (Shares outstanding: 520.8 million; Market cap: $14.2 billion), is a large Calgary-based oil and gas producer. Nexen has interests in the North Sea, the Gulf of Mexico, North America (including the Alberta oil sands), Yemen and off the Nigerian coast.

Nexen produces about 252,000 barrels of oil equivalent per day (this measurement includes natural gas)....

UNITED CORPORATIONS $46.50 (Toronto symbol UNC) (165 University Avenue, 10th Floor, Toronto, Ontario M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average- to above-average quality Canadian and foreign stocks. United Corporations’ $676.1-million portfolio is invested 35.3% in Canadian equities, 23.7% in the U.S., 20.2% in Europe, 12.5% in Asia, 6.3% in the U.K. and 1.0% in Mexico and Latin America. The fund’s largest holdings include: Bank of Nova Scotia, EnCana, Royal Bank, Nexen, Potash Corp., Chevron, CVS Caremark, Manulife, TD Bank, Roche Holdings and BASF AG....

We still think high-quality mutual funds with a long-term focus will beat stock-market indexes over time. If funds invest as we advise — sticking with well-established companies and spreading their assets across the five main economic sectors — they will likely lose a lot less than the indexes during a significant market downturn. That’s because big market slides are particularly hard on the stocks that were the most popular during the preceding rise, and our approach avoids excessive investment in these companies. In contrast, index funds do tend to load up on the hottest, most popular stocks as they rise. That’s because these stocks make up a growing proportion of the index as they increase in value. The most recent example is Potash Corporation of Saskatchewan, which, propelled by soaring fertilizer prices, had the highest market capitalization on the Toronto exchange last June. The shares have since dropped 54%....

When we judge the investment quality of an individual company, we take nine key factors into account. These are: a record of profit; a record of dividends; an influential industry position; balance-sheet strength; geographical diversification; freedom from business cycles; freedom from excess regulation or insider abuse; ability to profit from lasting secular trends (such as global economic liberalization); and the ability to cash in on habitual customer behaviour. Mutual-fund ratings are more complex, since they are a step removed from these factors. Before we award our CWA Fund Ratings (Aggressive, Conservative or Income), we assess a fund’s strengths and weaknesses in several key areas. We start by looking at the quality of the fund’s holdings, based on our nine key factors. Then we look at the degree to which its holdings are spread out across the five main economic sectors: Manufacturing, Resources, Consumer, Finance and Utilities. Funds that focus on narrow segments are more risky or aggressive than those that diversify, even if they focus on a conservative area, such as Utilities....

TRANSALTA CORP. $21.30 (Toronto symbol TA; Shares outstanding: 197.9 million; Market cap: $4.2 billion; SI Rating: Average) reported a 63.6% drop in its earnings during the three months ended March 31, 2009. The utility earned $36 million, or $0.18 a share, compared to $99 million, or $0.50 a share, a year earlier. Analysts were expecting $0.22. These figures exclude several non-recurring items, particularly a $65-million writedown of TransAlta’s Mexican power plants in the year-earlier quarter. (TransAlta sold all of its Mexican operations in the fourth quarter of 2008.) Revenue fell 5.9%, to $756 million from $803 million. TransAlta had to shut down some of its electrical-power plants for maintenance during the latest quarter, and this was the main reason for the lower revenue and earnings. Overall, TransAlta’s plants operated at 86.4% of capacity, compared to 91.8% a year earlier....

RBC CANADIAN DIVIDEND FUND $37.65 (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) invests in well-established, dividend-paying companies. In fact, it invests solely in common stocks. That’s why, despite the fund’s name, we rate it Conservative rather than Income. The $7.1-billion RBC Canadian Dividend Fund’s top stock holdings are: Royal Bank of Canada, Bank of Nova Scotia, TD Bank, Manulife Financial, Brookfield Asset Management, EnCana, Bank of Montreal, TransCanada Corp. and Power Corp. RBC Canadian Dividend is a Conservative buy.

ISHARES CDN LARGECAP 60 INDEX FUND $15.54 (Toronto symbol XIU; buy or sell through a broker) (units split 4-for-1 in August 2008) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses on the units are just 0.17% of assets. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, the index holds a few we wouldn’t include, such as Biovail Corp. The index’s top holdings are: Royal Bank of Canada, 7.2%; EnCana Corporation, 5.2%; Research in Motion, 5.2%; TD Bank, 4.9%; Bank of Nova Scotia, 4.2%; Manulife Financial, 4.0%; Potash Corporation, 3.9%; Canadian Natural Resources, 3.7%; Suncor Energy, 3.7%; Barrick Gold, 3.7%; Goldcorp, 2.9%; Canadian National Railway, 2.8%; Bank of Montreal, 2.6%; and CIBC, 2.5%....

PRECISION DRILLING TRUST, $5.70, Toronto symbol PD.UN, announced this week that it has issued $175 million in new long-term notes to the Alberta Investment Management Corporation (AIMCo). AIMCo is a crown corporation that manages Alberta’s public-sector pension plans and other special funds. Precision is making the move to strengthen its balance sheet. AIMCo also bought 35 million Precision units at $3.00 each, for a total of $105 million. Moreover, Precision will give AIMCo warrants to buy 15 million more units at $3.22 each over the next five years. (As of March 31, 2009, there were 206.2 million Precision units outstanding.) AIMCo now owns roughly 15% of Precision’s units. This will rise to 19% if it exercises all of the warrants....

These five large funds — one from each of Canada’s big-five banks — have suffered over the last year. That’s because they were heavily weighted toward financial services and resource stocks. Financial services companies are still dealing with tight credit markets. As well, the recession has cut demand for resources. This, in turn, has driven down the prices of resource stocks. We still feel that the best way to profit in the stock market is to stick with high-quality, well-established companies and to spread your money out among the five sectors.You should also ensure your investments are diversified within each sector. These five funds continue to stick to high-quality investments. However, you still should adjust your portfolio to reflect the funds’ high weightings in certain sectors....

BMO EQUITY FUND $20.70 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ontario, M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) mostly invests in blue chip Canadian companies. The fund’s managers aim to identify stocks based on their analysis of the outlook for the industry the firms operate in, as well as their earnings records, management strength and growth potential. The $1.4-billion BMO Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Natural Resources, Suncor Energy, EnCana Corporation, Barrick Gold, Manulife Financial, CIBC and Goldcorp. The fund currently holds 35.9% of its portfolio in the resource sector. Its next-largest segment is financial services, at 21.6%....