WHAT ARE WE LOOKING FOR?
Periodically, the Number Cruncher column likes to scour the mutual fund world for fallen idols, by which we mean solid names that that have hit a slump. Our latest foray emphasizes strong long-term results coupled with dismal recent returns.
We started with funds of all types that have 10-year compound average annual returns that put them in the first quartile for their categories, which means in the top 25 per cent. We then scanned this list for funds that in the past year have achieved the ignominious distinction of a fourth-quartile ranking, which means their returns are among the bottom 25 per cent of their respective categories.
SO WHAT DID WE TURN UP?
Quite a number of funds that look weak in the short term and strong in the long term. The question for investors is which view deserves more weight.
An ideal test case is IA Clarington Canadian Conservative Equity, which dates back to 1950 and is still being managed by the some of the same people who produced its comfortably above-average long-term numbers. This fund is significantly less volatile than the broad stock market, and its top holdings are all dividend-paying blue-chip stalwarts. It looks like a candidate for conservative investors seeking a buy-low opportunity.
The two Chou funds stand out because Francis Chou, their manager, is a respected figure in the fund world who has done well in the past by focusing on downtrodden stocks. Chou RRSP holds beaten-up names like Biovail and CanWest Global Communications, and it doesn't have much exposure to prime market drivers like energy, gold and metal stocks.
ABC American-Value is another compelling buy-low opportunity (if you have $150,000 to buy in), and so is Bissett Microcap if you want exposure to risky small stocks. Both funds continue to be run by the people who generated those good long-term numbers, and they're both on sale.
|Funds with 1-yr 4th quartile returns & 10-yr 1st quartile returns|
|As of Sept 2007|
|Fund name||MER date||MER||Category||return||quartile||return||quartile|
|Bissett Microcap-F||28-Sep-07||2.32||Canadian Small or Mid Cap Equity||9.95||4||19.62||1|
|Renaissance Global Health Care||28-Feb-07||3.16||Health Care Equity||-3.51||4||14.81||1|
|Chou RRSP||29-Dec-06||1.74||Canadian Focused Small/Mid Cap Equity||7.73||4||12.77||1|
|AIM Canadian First Class||28-Sep-07||2.40||Canadian Focused Equity||8.42||4||12.24||1|
|CIBC Canadian Small Companies||31-Aug-07||2.56||Canadian Small or Mid Cap Equity||13.28||4||12.19||1|
|Saxon Small Cap||29-Dec-06||1.86||Canadian Small or Mid Cap Equity||11.00||4||12.03||1|
|AGF European Equity Class||31-Oct-07||2.93||European Equity||6.82||4||11.46||1|
|Chou Associates||29-Dec-06||1.74||Global Small/Mid Cap Equity||1.86||4||11.26||1|
|IA Clarington Cdn Conservative Eqty||31-Oct-07||2.42||Canadian Equity||7.03||4||10.47||1|
|Mackenzie Cundill Cdn Security 'A'||30-Jun-06||2.14||Canadian Focused Equity||7.38||4||10.36||1|
|CI Signature High Income||28-Sep-07||1.54||Canadian Equity Balanced||2.74||4||10.32||1|
|Acuity High Income||31-Jan-07||2.30||Canadian Equity Balanced||4.14||4||9.74||1|
|ABC American-Value||31-Mar-05||2.00||U.S. Small or Mid Cap Equity||-7.08||4||8.25||1|
|National Bank Dividend||28-Sep-07||1.70||Canadian Equity Balanced||4.14||4||7.85||1|
|Altamira Asia Pacific||31-Oct-07||2.70||Asia Pacific Equity||9.66||4||4.60||1|
|United-US Equity Value Pool Class W||28-Sep-07||0.21||U.S. Equity||-2.95||4||4.03||1|
© 2007 The Globe and Mail. All rights reserved.
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.