Can a Mutual Fund Get Better With Age?

Can a Mutual Fund Get Better With Age?

The average age of a mutual fund is just 8.6 years, which makes it quite a rare achievement for a fund to cross the 30 year mark.

However, after making it through two major recessions and countless global events, the TD Dividend Growth Fund has done just that.

In late 2017, the fund celebrated its 30th anniversary.

The Fund’s Purpose

Formed in 1987, the TD Dividend Growth Fund has the objective of providing high level of after-tax income for medium and long term focused investors and steady growth. It does this by investing in dividend stocks.

Key Reasons to Own:

• Aims to combine strong performance with less volatility
• Primarily invests in the stocks of high-quality companies
• Focusing on Canadian dividends may gain favourable tax treatment
• Dividends can provide income during retirement
• Dividends accelerate through the power of compounding
• If your dividends grow, it’s like getting a raise each year

For any investor that put $100,000 in the TD Dividend Growth Fund in 1987, they would have over $1.5 million today – beating the S&P/TSX Total Return by over $400,000.

This puts the fund in the top quartile of funds for performance over the last 30 years (as of Dec 31, 2017), as per Morningstar.

Why The Fund Could Last Another 30 Years

The fund’s portfolio managers understand the importance of collaboration, and work closely with the Fundamental Equity Research team to find and invest in dividend-growth companies. Further, they also work closely with the fixed income and asset allocation teams to create secured, well-diversified portfolios.

The portfolio managers also follow a disciplined investment process and conduct detailed fundamental research to identify high quality companies that feature consistent, growing dividends.

The outcome?

This approach offers growth potential plus a stream of dividends, which can help to provide both income and portfolio stability.