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A time for caution: Seeking the cash component

What are we looking for?

Canny, cautious equity fund managers who are well positioned to handle an unsettled stock market.

Today's search

A clear sign of caution in a fund manager is a large cash component in his or her portfolio. So let's screen Canadian, U.S. and global equity funds to find those individual funds with the highest cash weightings right now. Next, we'll pare the list down by insisting that all funds have 10-year compound average annual

returns that are above average. Being cautious in the face of an uncertain stock market is one thing. Being cautious with a past record of success is another.

So what did we turn up?

Several funds with at least 10 per cent of their holdings in cash, which shows a clear conviction that caution is warranted in

today's market. After all, equity funds charge healthy fees to

investors to choose stocks, not hold cash. A manager who parks money in cash must really

believe that stocks are going to be cheaper at some point coming up.

Just as you'd expect if you know the big names in conservative investing, CI Harbour,

Mackenzie Ivy Foreign Equity and Mackenzie Cundill Value all figure prominently on today's list. Each of these funds operate on the idea of investing in good but

undervalued companies, not

following trends, and they place a high premium on protecting unitholders in down markets. CI Harbour is worth further study if you need a Canadian equity fund, while Cundill Value has been a stronger performer in the global equity category in recent years than Ivy Foreign.

A lesser known but noteworthy name on the list is Mutual Beacon, a global equity fund that offers much lower volatility than its peers combined with returns that generally come in somewhat better than average.

Frugal-minded investors looking for something conservative might want to take a look at Beutel Goodman Canadian Equity, which had a 9.5-per-cent cash weighting at its last reporting date. This fund has a low management expense ratio of 1.42 per cent and much lower volatility than the S&P/TSX composite index. The 10-year return is comfortably above average, but results in the high-flying markets of recent years have lagged.

Next

Globefund's fund profiles break down the holdings of individual funds, including cash, and they also show you how funds have performed over a wide variety of time frames.

CashCash%
holdingholding10-yr return
Fund nameFund categoryeffective date%(As of Jun '07)
Value Contrarian Canadian EquityCanadian Equity12/29/200626.7211.49
Mackenzie Ivy Foreign EquityGlobal Equity6/29/200718.086.31
CI HarbourCanadian Focused Equity6/29/200715.2810.93
Dynamic Global Value FundGlobal Equity4/30/200715.027.21
FMOQ International EquityInternational Equity3/30/200115.005.20
Mutual BeaconGlobal Equity12/29/200614.816.86
Mackenzie Cundill Cdn Security 'A'Canadian Focused Equity6/29/200713.7511.66
Investors U.S. Opportunities-CU.S. Equity9/30/200313.534.75
Dynamic DividendCanadian Focused Equity4/30/200713.499.76
Dynamic Dividend ValueCanadian Focused Equity4/30/200713.3810.10
CI Synergy AmericanU.S. Equity6/29/200712.082.39
Mackenzie Cundill Value 'A'Global Equity4/30/200311.819.92
Investors U.S. Large Cap Value-CU.S. Equity6/30/200311.455.96
Stone & Co. Flagship Stock-ACanadian Focused Equity3/30/200710.608.89
Beutel Goodman Canadian EquityCanadian Equity6/29/20079.4910.29
Beutel Goodman Int'l EquityInternational Equity6/29/20079.383.16
Mackenzie Univ US Growth LeadersU.S. Equity6/29/20078.912.70
Dynamic Canadian Dividend FundCanadian Focused Equity4/30/20078.7811.59
Mackenzie Maxxum DividendCanadian Focused Equity6/29/20077.9810.24
Investors Summa-CCanadian Focused Equity6/30/20037.218.92
Renaissance Canadian Core ValueCanadian Focused Equity6/29/20077.0511.17
Integra EquityCanadian Equity6/29/20076.899.02
CI American Small CompaniesU.S. Equity6/29/20076.653.28
United-Real Estate Invest Pl Cl WInternational Equity6/29/20076.6210.97
BMO DividendCanadian Dividend and Income Equity3/30/20076.3913.55
AGF Canada ClassCanadian Equity4/30/20075.958.63
Mackenzie Maxxum Dividend GrowthCanadian Focused Equity6/29/20075.729.23
RBC Canadian DividendCanadian Dividend and Income Equity4/30/20075.5612.89
Northwest Global EquityGlobal Equity6/29/20075.485.20
AIM Canadian PremierCanadian Focused Equity6/29/20075.4412.33
IA Clarington Dividend IncCanadian Dividend and Income Equity6/29/20075.059.42
CIBC DividendCanadian Dividend and Income Equity6/29/20074.889.61
Investors Global-CGlobal Equity6/30/20034.86.07
Fidelity True North-ACanadian Equity5/31/20074.811.77
IA Clarington Canadian EquityCanadian Focused Equity6/29/20074.799.42

SOURCE: GLOBEFUND

rcarrick@globeandmail.com

© 2007 The Globe and Mail. All rights reserved.

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