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A match made in Heaven
Jade Hemeon
June 9, 2000
Don't judge a book by its cover
David Cooke
June 2, 2000
A comeback for old tax haven
Ned Goodman
May 26, 2000
Strength in numbers
Grant Forster
May 24, 2000
Resources will rock
Roger Mortimer
May 15, 2000
Thou shalt not speculate
Larry Sarbitt
May 5, 2000
More is better than less
Stephen Kangas
May 1, 2000
Bite the bullet
Dan Hallett
April 25, 2000
The New Economy is not what you think
Stephen Waite
April 14, 2000
Rough sailing
Bob Haber
April 10, 2000
Taxing times
Garth Turner
March 24, 2000
Tax tips for everyone
Jamie Golombek
March 17, 2000
She could see it coming
Veronika Hirsch
March 10, 2000
Changes bring opportunities
Chris Jenkins
March 3, 2000
Good guys finish first
Allan Brown
February 25, 2000
For better or for worse, it's a Fidelity fund again
Bob Haber
February 11, 2000
Wealth Management for Everybody
George Mancini
February 4, 2000
Spanning the globe for entrepreneurs
Andrew Waight
January 28, 2000
Boomer fund manager
Ray Steele
January 21, 2000
The only way to go
Duncan Stewart
January 14, 2000
Silicon Valley East, way east
Bhim Asdhir
January 7, 2000


For more past issues, please check our full Fund People archives
  
Focus
Investment strategy
Highlights
  • Sell high tech funds
  • His best fund recommendations
    •

    Bite the bullet

    LEVI FOLK, RICHARD WEBB AND PETER DIPLAROS
    Tuesday, April 25, 2000

    Dan Hallett, senior investment analyst with Sterling Mutuals says that the recent tumble in the high-tech stock market should be a lesson to remember.

    “I’ve been concerned for some time now that people are paying too much attention to recent fund performance and are loading up on high tech funds,” he says. The danger, according to Dan, is that people end up with unrealistically high expectations. “The performance influences what people expect,” he adds. “I agree that the Internet and technology will play a big role in the future of the economy,” he says, “but the techs are not necessarily a bargain now and there is more volatility to come.”

    Dan’s lesson has nothing to do with techs, however, but everything to do with having a quality portfolio. “The euphoria in tech stocks all of last year meant that everything associated with the sector was bid up, and prices moved independently from fundamentals.” When the sector took a big fall, as the Nasdaq did recently, it forces people to evaluate their tolerance to risk. Dan thinks this is a good opportunity for people to realize that and get rid of any bad habits. “Go back to the original reasons why you are invested in the first place,” he says. “In some cases, if you find that you’re overweight in techs, then it’s better to sell now and fix your portfolio.” Dan admits that this medicine will taste sour to many investors but he believes that, in the long term, people will be better off if they learn to become immune to market exuberance. “The important thing is that your portfolio should suit your long-term needs,” he says.

    For his clients at Sterling Mutuals, Dan advises consistency of performance, and examining the risk-return tradeoff carefully. “I don’t take a tactical view of asset allocation,” he says.

    “It would be advisable right now to balance out your heavy growth funds with some value-oriented funds,” he says. There are lots to choose from, but his favourites are Trimark Canadian and Scudder Canadian Equity. As far as high-tech funds are concerned, Dan likes Universal Future, managed by John Rohr. “He’s one of the most conservative managers, and he has a broader view of what constitutes a tech stock,” he says. His fund will include companies that are not Internet-related but will use technology in a fundamental way in their business. “Also, he’s more sensitive to valuations and won’t tolerate a high P/E ratio,” he adds. The fund also has a low turnover, four or five times less than what is common in the category.

    Dan’s favourite funds of all time also include: Universal European Opportunities, C.I. American, AGF International Value, Bissett Microcap, AGF 20/20 Aggressive Growth and C.I. Emerging Markets. “I’m not a fan of narrow-scope funds, because when the fund is too specific it takes away from the active management aspect,” he says, “but the Altamira Science & Technology and Green Line Science & Technology are both attractive investments.”

    Levi Folk, Richard Webb and Peter Diplaros are Investment.com mutual fund specialists and editors of the Fund Counsel newsletter. They can be reached by e-mail at peterd@hqinvestment.com.

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