Summary
This report compares the largest equity funds of 19 Canadian fund families: the six big banks, Desjardins, four insurers (Manulife, Canada Life, Sun Life, iA Clarington) and eight independent managers (Fidelity, CI, Mackenzie, Dynamic, Franklin Templeton, AGF, EdgePoint, Mawer). It uses Morningstar Canada data as of October 25, 2026, and it measures what a Québec corporation would have kept after the tax on each fund's distributions.
The finding is narrower than the earlier reports suggested. The family and the fund matter; the distribution channel does not. Taken together, bank funds did slightly better than insurer and independent funds after tax, both since January 2021 and since January 2016. Within every channel, the gap between the best and the weakest family is several times larger than the gap between channels. Fidelity and EdgePoint lead the independents, BMO and RBC lead the banks since 2021 (National Bank and Scotia since 2016), iA Clarington and Canada Life lead the insurers, and several independent families sit at the bottom.
Taxes matter less than fund selection, but they are not small. The yearly tax on distributions ranged from nothing to 3.3% of the fund's value among the finalists. A corporate class version reduced that tax by about 0.4 points a year on average, but beat its own trust version after tax in only 25 of 46 pairs since January 2021, and in 30 of 44 since January 2016.
All returns run to October 23, 2026, and include this year to date. They are shown over three windows: since January 2021, since January 2018 and since January 2016. This version replaces the first one published the same day, which stopped at December 2025 and missed the 2021 distributions of 115 funds; adding them raised those funds' tax drag by up to 0.7 points a year. It also corrects a data error found later the same day: for 53 funds, Morningstar's duplicate U.S.-dollar record had been used, so their returns were in U.S. dollars. All tables now use Canadian-dollar returns; the conclusions are unchanged.
Key Findings
Does the Distribution Channel Predict Results?
Earlier reports argued that independent managers outperform because performance is their only marketing, while banks and insurers can rely on branches and existing policies. That idea was tested here on every fund in the sample, pooled by channel.
| Channel | Funds | Median after tax, since Jan 2021 | Median after tax, since Jan 2016 | Fund-years in top half of category | Median tax drag per year |
|---|---|---|---|---|---|
| Banks (BMO, RBC, TD, Scotia, CIBC, National Bank) | 86 | 11.13% | 9.33% (79 funds) | 51% | 0.66% |
| Insurers (Manulife, Canada Life, Sun Life, iA Clarington) | 58 | 9.91% | 8.32% (44 funds) | 47% | 0.78% |
| Independent managers (8 families) | 95 | 9.75% | 8.06% (80 funds) | 45% | 0.62% |
| Desjardins (cooperative) | 15 | 6.96% | 6.90% (9 funds) | 38% | 0.80% |
The channel story holds for some families, not for channels. Fidelity and EdgePoint, two independents, have the strongest after-tax results in the sample since January 2021. But Franklin Templeton, AGF, Dynamic and Mawer, also independents, rank below every bank on after-tax results since January 2021, and CI ranks below every bank since 2016. Bank funds as a group finished slightly ahead in every window. A firm that has to win advisors on merit is not automatically better; the comparison has to be made family by family and fund by fund.
Family Results
Each family is represented by its 15 largest equity funds with at least five years of history (fewer where the family has fewer). Values are medians across the family's funds, so the columns are not meant to add up. "Spread" is the standard deviation of the funds' after-tax returns: a low spread means the family's funds performed alike, a high one means one or two funds carried the family.
| Family | Channel | Funds | Before tax, since Jan 2021 | Tax drag per year | After tax, since Jan 2021 | After tax, since Jan 2018 | After tax, since Jan 2016 (funds) | Fund-years in top half | Spread across funds |
|---|---|---|---|---|---|---|---|---|---|
| EdgePoint | Independent | 2 | 14.25% | 0.37% | 13.93% | 9.22% | 10.32% (2) | 65% | 3.67 |
| Fidelity | Independent | 15 | 13.39% | 0.56% | 12.66% | 11.25% | 9.85% (12) | 50% | 2.59 |
| BMO | Bank | 14 | 13.68% | 0.83% | 12.34% | 8.74% | 9.07% (12) | 53% | 1.80 |
| RBC | Bank | 14 | 12.52% | 1.03% | 11.45% | 9.10% | 9.34% (14) | 53% | 3.83 |
| TD | Bank | 15 | 11.35% | 0.67% | 11.25% | 9.48% | 9.35% (13) | 52% | 3.79 |
| iA Clarington | Insurer | 13 | 12.16% | 0.93% | 11.09% | 8.11% | 8.03% (11) | 40% | 3.22 |
| Canada Life | Insurer | 15 | 11.47% | 1.08% | 11.03% | 7.97% | 8.66% (7) | 44% | 4.61 |
| Scotia | Bank | 15 | 11.81% | 0.49% | 10.56% | 9.41% | 9.47% (15) | 51% | 3.45 |
| CI | Independent | 15 | 10.84% | 0.74% | 10.56% | 7.51% | 7.89% (13) | 41% | 2.53 |
| CIBC | Bank | 15 | 10.10% | 0.30% | 10.10% | 9.05% | 9.24% (15) | 48% | 3.66 |
| Sun Life | Insurer | 15 | 10.22% | 0.41% | 9.96% | 8.32% | 8.52% (12) | 47% | 2.42 |
| National Bank | Bank | 13 | 10.37% | 0.64% | 9.90% | 8.82% | 9.82% (10) | 48% | 2.44 |
| Mackenzie | Independent | 15 | 10.40% | 0.59% | 9.65% | 8.16% | 8.74% (11) | 49% | 4.50 |
| Franklin Templeton | Independent | 12 | 9.80% | 0.73% | 9.27% | 7.49% | 7.09% (10) | 39% | 3.85 |
| AGF | Independent | 14 | 10.52% | 0.65% | 9.14% | 7.57% | 7.45% (14) | 41% | 3.10 |
| Manulife | Insurer | 15 | 8.88% | 0.88% | 7.31% | 7.84% | 8.31% (14) | 55% | 2.24 |
| Desjardins | Cooperative | 15 | 8.07% | 0.80% | 6.96% | 6.83% | 6.90% (9) | 38% | 2.99 |
| Mawer (F series, fee added) | Independent | 7 | 6.49% | 0.51% | 5.93% | 6.45% | 7.09% (5) | 49% | 3.10 |
| Dynamic | Independent (owned by Scotiabank) | 15 | 6.77% | 0.61% | 5.43% | 7.79% | 7.97% (13) | 47% | 4.95 |
Three patterns stand out. BMO has the tightest lineup (a spread of 1.80) together with strong results, so a client is less exposed to picking the wrong fund; Fidelity combines the best results since 2018 with a moderate spread (2.59). Dynamic, Mackenzie and Canada Life have the widest spreads: one or two funds, in each case including a precious metals fund, lift a family whose other funds are ordinary. Manulife and Dynamic look much better since 2016 than since 2021, so their weakness is recent.
Consistency Against Peers
For each fund, Morningstar gives its percentile rank in its category for every calendar year. The share of fund-years spent in the top half of the category is the most direct measure of consistency available. No family stayed above the category median much more than half the time: Manulife 55%, BMO and RBC 53%, TD 52%, Fidelity 50%, with EdgePoint at 65% on only two funds. At the other end, Desjardins (38%), Franklin (39%), iA Clarington (40%), CI and AGF (41%) spent most years in the bottom half. Consistency, more than any single year's return, is what separates the families worth using.
Risk-Adjusted Measures
Averages of each family's three-year Morningstar measures. Alpha is measured against each fund's category benchmark. Over the last three years, only 35 of the 261 funds in this sample had positive alpha, so every family's average is negative; what matters is the comparison between families.
| Family | Alpha (3y avg) | Sharpe (3y avg) | Beta (3y avg) | Morningstar stars (avg) |
|---|---|---|---|---|
| BMO | -0.81 | 1.57 | 0.92 | 3.36 |
| Canada Life | -1.74 | 1.34 | 0.87 | 3.07 |
| Sun Life | -2.27 | 1.36 | 0.82 | 2.83 |
| Mackenzie | -2.29 | 1.19 | 0.92 | 3.15 |
| RBC | -2.51 | 1.41 | 0.94 | 3.21 |
| TD | -2.74 | 1.32 | 0.87 | 3.08 |
| CIBC | -2.83 | 1.26 | 0.92 | 3.00 |
| National Bank | -2.99 | 1.24 | 0.85 | 2.73 |
| Mawer | -3.06 | 1.04 | 0.81 | 2.88 |
| Fidelity | -3.26 | 1.44 | 1.14 | 3.78 |
| iA Clarington | -3.32 | 1.29 | 0.84 | 2.36 |
| EdgePoint | -3.47 | 1.15 | 0.77 | 2.50 |
| Scotia | -3.62 | 1.26 | 0.90 | 3.07 |
| AGF | -3.63 | 1.21 | 0.92 | 2.78 |
| CI | -3.86 | 1.34 | 1.03 | 2.36 |
| Dynamic | -4.31 | 1.19 | 1.03 | 2.40 |
| Manulife | -4.34 | 1.18 | 0.79 | 2.58 |
| Desjardins | -5.66 | 1.09 | 0.98 | 2.33 |
| Franklin Templeton | -5.91 | 1.10 | 0.98 | 2.38 |
Fidelity's alpha is lower than its other results suggest because its funds carry more market exposure (beta 1.14, the highest in the sample), which alpha penalizes. Its Sharpe ratio (1.44) is second only to BMO's, and it has the highest average star rating (3.78).
After Tax in a Corporation
A fund held in a corporation is taxed each year on what it distributes, whether or not the money is withdrawn. Each fund's distributions from 2021 to October 2026 were split by type, as Morningstar reports them, and taxed at 2026 Québec corporate rates: 50.17% on interest and foreign income, 38.33% refundable Part IV tax on Canadian dividends, and 25.09% on capital gains (half taxable). Return of capital was not taxed. The yearly tax was then subtracted from each calendar year's return and from this year's return to date. For years before 2021, where no split by type is available, each fund's 2021 to 2025 average was used. No refund was credited (refundable tax, dividend refund, capital dividend account), so the figures show the cost while the money stays invested in the corporation.
Among the 38 finalists (the top two diversified funds of each family), the yearly drag over 2021 to 2025 ranged from nothing to 3.34% of the fund's value. Eight funds paid almost nothing. At the other end, a Canadian dividend fund that paid out about 10.6% a year cost the corporation 3.34 points a year, and four U.S. dividend, quantitative and Canadian equity funds lost 2.2 to 2.3 points. A fund with a strong headline return and heavy yearly distributions can end up behind a quieter fund with a lower return.
46 funds in the sample exist both as a trust and as a corporate class. The class version reduced the yearly tax by 0.43 points on average, but its own return before tax was often lower, so it came out ahead after tax in only 20 of the 46 pairs since January 2021, and in 28 of 43 since January 2016. Since 2021, the trust beat its class twin by up to 1.6 points a year after tax, and the class beat its trust by up to 2.1 points. Corporate class helps when it is the same strategy at a similar return. It does not replace choosing the right fund.
What Changed Since the Earlier Reports
The August 2025 and March 2026 reports found that Fidelity was the only family with positive alpha and the most consistent lineup. With today's data and a wider sample, both statements no longer hold: Fidelity's three-year alpha is negative like everyone else's, and BMO's lineup is tighter. What has held across all three reports is Fidelity's long-term record, its star ratings and its place near the top of the category rankings. This report also widens the sample from 7 to 19 families, keeps ETF-wrapper and index funds when they are among a family's largest, and counts a trust and its corporate class as one strategy.
Methodology and Data Sources
Data: Morningstar Canada, retrieved October 25, 2026 (fund size as of October 23, 2026), including each fund's calendar-year returns and percentile ranks for 2016 to 2025, its return for 2026 to October 23, and its distributions by type for 2021 to October 2026. Morningstar shows only a fund's last five years with a distribution, so for 115 funds that have already paid in 2026 the 2021 payouts were rebuilt from Morningstar's record of individual payments (58 funds) or, where that record does not reach 2021, estimated from the fund's 2022 to 2025 average (57 funds). Distribution figures were spot-checked against fund company documents (annual management reports and tax-factor tables) and matched.
- For each family, the 15 largest equity strategies by fund size. A trust and its corporate class twin count as one strategy, and the class version is used when it qualifies.
- Series with advisor compensation included in the management expense ratio (series A or the family's equivalent), so returns are net of everything an advisor-served client pays. Where a family offers no such series (Mawer), the F series is used and 1.15% a year is deducted for an advisory fee and sales tax.
- At least five years of history in the series used. Funds sold only in private-wealth or institutional series are excluded. Alternative funds are excluded.
- Returns are annualized from January of the starting year to October 23, 2026 (2026 counts as 0.81 of a year). Year-end values were rebuilt from the current value, calendar returns and distributions. Each window includes only funds with every year of it; the number of funds in the 2016 window is shown in brackets.
- Families sorted by median after-tax return since January 2021. Tax drag per year is the average of 2021 to 2025. Medians are computed separately for each column. December 2026 distributions are not yet known, so this year's tax is understated slightly.
Correction (October 25, 2026): Morningstar keeps a duplicate record for some funds that reports returns in U.S. dollars. For 53 of the 319 funds, the first version of this report used that record. Their calendar returns and percentile ranks were replaced with those of the Canadian-dollar record of the same series. Distributions and tax drag were not affected, because each record reports distributions and fund value in the same currency. A companion persistence report tests whether past leaders kept leading.
Past performance does not guarantee future results. Specific fund names and up-to-date performance data are available upon request.
Report dated October 25, 2026. Data source: Morningstar Canada.