royal bank

The performance of these five large funds run by each of Canada’s big-five banks has differed widely. That’s because they typically have high weightings in certain sectors — most recently Financial services and Resources stocks. Some, like TD Canadian Equity have benefited from a focus on Resources. Others, like CIBC Canadian Equity were hurt by a concentration in Finance shares. We still feel that the best way to profit in the stock market is to stick with high-quality, well-established companies, and to diversify among the five sectors, and within each sector. However, you won’t go too far wrong with these five funds. They stick with high-quality issues with sound fundamentals, so their concentrations in certain sectors don’t add a lot of risk over the long term. Each has its quirks, but overall they are well positioned for low-risk returns....

RBC CANADIAN EQUITY FUND $29.08 (CWA Rating: Conservative) (RBC Mutual 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) mainly invests in larger-capitalization stocks, but also looks for opportunities in small- and mid-cap stocks. The fund’s 10 largest holdings are EnCana, Potash Corp., Research in Motion, Manulife, Royal Bank, Suncor Energy, TD Bank, Canadian Natural Resources, Bank of Nova Scotia and Goldcorp. The $5.1-billion fund invests 45.3% of its holdings in resource stocks. It also holds 27.7% in finance. Over the last ten years, RBC Canadian Equity posted an 8.7% annual rate of return. That’s just over the S&P/TSX’s gain of 8.1%. The fund gained 5.9% over the last year, less than the S&P/TSX’s 6.6%. The fund’s MER is 1.99%. RBC Canadian Equity Fund is a buy....

ENCANA CORP. $94.20, Toronto symbol ECA, gained 10% this week after it decided to split itself up into two companies – one focusing on natural gas, the other on oil sands and oil refineries. The gas company will keep the EnCana name, while the oil company will assume a new name. Shareholders will receive one new common share in each new company for every EnCana share they hold. Investors will not be liable for capital gains taxes until they sell their new shares. EnCana intends that the initial combined dividends of the two companies will be equivalent to its current annual dividend rate of $1.60 U.S. per share (1.7% yield). EnCana aims to complete the plan in early 2009. The EnCana situation is a little different from a typical spinoff in that the two portions are of comparable size. More often, the company that is created and handed out or spun off to its shareholders as a special dividend is much smaller than the parent....

SCOTIA CANADIAN GROWTH FUND $67.62 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $579.2 million Scotia Canadian Growth Fund’s largest stock holdings include Manulife, Royal Bank, TD Bank, Research in Motion, Potash Corp., Suncor Energy, Bank of Nova Scotia and EnCana Corp. Scotia Canadian Growth currently holds 33.8% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 28.9%....

UNITED CORPORATIONS $62 (Toronto symbol: UNC) (165 University Ave., 10th Floor, Toronto, ON M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks. At last report, 35.3% of the fund’s $1.0 billion portfolio was invested in Canadian equities, 23.7% in the U.S., 20.2% in Europe, 6.3% in the UK, 12.5% in Asia and 1.0% in Mexico and Latin America. The fund’s largest holdings included Bank of Nova Scotia, Royal Bank of Canada, Manulife, Talisman Energy, Algoma Central Corporation, Nexen, TransCanada Corporation, Pfizer Inc., TD Bank and Chevron....

HARBOUR FUND $21.66 (CWA Rating: Conservative)(C.I. Mutual Funds, 151 Yonge St., 7th Floor, Toronto, ON M5C 2W7. 1-800-268-9374; Web site: www.cifunds.com. Load fund — available from brokers) invests in only 25 to 40 high-quality mostly Canadian stocks, and it may hold stocks for four or five years to realize their value. The $5.2 billion Harbour Fund’s top holdings include Royal Bank, CN Railway, Goldcorp Inc., Suncor Energy, Bank of Nova Scotia, General Electric, EnCana Corp., Petro-Canada, Rio Tinto, TD Bank and BHP Billiton. The Harbour Fund gained 5.5% over the last year. Its MER is 2.33%....

Royal Bank of Canada $47 (Toronto symbol RY Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $61.1 billion; SI Rating: Above average) Royal Bank is expanding its wealth management operations. In Canada, it has agreed to acquire Phillips, Hager & North Investment Management Ltd., which has $69 billion in assets under management. Royal will pay roughly $1.3 billion in stock. In the United States, Royal has agreed to buy banking and investment firm Washington D.C.-based Ferris, Baker Watts, Inc. The bank did not reveal the price, but Ferris has $18.5 billion U.S. in assets under administration. These purchases will increase Royal’s assets under management by roughly 50%. Meanwhile, Royal earned $0.95 a share (total $1.2 billion) in the three months ended January 31, 2008, down 16.7% from $1.14 a share ($1.5 billion) a year earlier. The latest earnings included a $187 million writedown of securities backed by U.S. subprime mortgages. Revenue fell 1.7%, to $5.7 billion from $5.8 billion....

ISHARES DIVIDEND INDEX FUND $20.28 (Toronto symbol XDV; buy or sell through a broker) began trading in December, 2005. The fund currently holds the 30 highest yielding Canadian stocks. These stocks are included in the index based on their dividend growth, yield and average payout ratio. The weight of any one stock in the fund is limited to 10% of the fund’s assets. Its MER is 0.50%. iShares Dividend Index Fund now yields 3.2%. The fund’s top holdings are: CIBC at 7.6%; Manitoba Telecom at 5.7%; Bank of Montreal, 5.7%; National Bank, 5.2%; TD Bank, 5.0%; Royal Bank, 4.5%; Russel Metals, 4.4%; Telus Corp., 4.1%; Bank of Nova Scotia, 3.9%; IGM Financial, 3.7%; Rothmans, 3.5%; TransCanada Corporation, 3.3%; BCE Inc., 3.3%; Laurentian Bank, 3.2%; and Enbridge, 3.1%....

ISHARES CANADIAN SHORT BOND INDEX FUND $28.73 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the Scotia Capital Short Term Bond Index. This index consists of a diversified range of investment grade federal, provincial, municipal and corporate bonds, with terms to maturity of between one and five years. Top issuers include Canada Mortgage and Housing, RBC Capital Trust, Province of Ontario, Province of Quebec and Royal Bank of Canada....

We generally advise against investing in bond funds because we doubt that bond fund managers can add enough value to offset their fees. However, if you need steady income and want to hold bond funds, here are two funds that have low fees and top-quality holdings, and that stay out of speculative trading. ISHARES CANADIAN SHORT BOND INDEX FUND $28.73 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the Scotia Capital Short Term Bond Index....