Canadian mutual fund families can provide a prudent approach to business investing with new methods and vehicles to utilize cash reserves to increase the financial security of a company. As with any other investing option, you should perform a thorough analysis of each Canadian mutual funds' historical performance. The top-rated Canadian mutual funds can offer returns that are competitive with any other fund in the industry.

Not only can these Canadian mutual fund families provide investing alternatives for the company itself, they can help the company's employees as well. Depending on the rules of employee 401k plans, Canadian mutual funds can offer another investing choice for the company-sponsored employee retirement plan.

Prior to adding any investment vehicles from mutual fund families in Canada to the company or employee investment portfolio, you should consider the following:

1. How do the Canadian mutual funds compare to other similar funds?

2. What are the company’s investment goals and guidelines?

3. How much risk and fees does each Canadian mutual fund contain?

Action Steps
The best contacts and resources to help you get it done

Assess the investment goals of your company

While mutual funds are relatively safe, there is still inherent risk when you invest in them.

I recommend: Some companies are more tolerant of risk than others, but even the best investment vehicles carry some form of risk. Therefore, a company must determine just what amount, if any, they want to invest in mutual funds in Canada given the risk tolerance of the specific company. That is why you should invest in Canadian mutual fund families with an established history and a steady rate of return. The fund library website offers a complete list of Canadian mutual funds by company and links to each ones home page.

Research each Canadian mutual fund under consideration

Once you understand the company or individual risk tolerance, research each mutual fund thoroughly to ascertain the best Canadian mutual fund given your investment goals.

I recommend: Start with the top 20 Canadian mutual funds and then narrow your list to the top five mutual funds in Canada. Most lists are going to use rate of return to rank each mutual fund. You need to make sure that ranking is a sufficient time horizon to properly analysis the financial fitness of the fund. A minimum time horizon from the research should be five years. That way you can weed out the funds that perform well in the short term but cannot sustain the returns over time. Globefund has an excellent mutual funds filter to research one that is right for your specific business investment needs.

Investigate the Canadian mutual fund prior to investment

While most Canadian mutual funds are reputable, there are instances of fraudulent or poorly ran mutual funds.

I recommend: Before you or your business invests in any Canadian mutual fund, it is best to check to see if any customers lodged complaints against the fund. The Mutual Fund Dealers Association of Canada and Canadian Investment Funds Standards Committee are two excellent sources of information on any Canadian mutual fund you may be thinking of as an investment.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Understand that some funds that appear to be a mutual fund in Canada are merely a subsidiary of bigger mutual funds based in other countries. Therefore, if you want to invest in strictly Canada mutual fund families, you should research the company history and the location of the home office.