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Cautious fund managers holding cash cushions


The stock markets have been extremely volatile in recent days, raising questions about what's ahead for this year. Let's see how mutual fund managers view the prospects for 2008.


One way to measure a manager's take on the markets is to see how much cash he or she is holding. Cash doesn't return much these days, but it's utterly bear-proof in a down market. Here, we've taken funds in major equity and balanced categories and ranked them by the percentage of cash they held as of their most recent portfolio reporting date. To be sure we're looking at funds of influence, we've used a minimum size of $350-million in assets and limited the field to funds that have been above average in the past one- and five-year periods (first- or second-quartile rankings).


A distinct indication of cautious thinking by some managers. Notice the number of dividend, balanced and monthly income funds that made the list. These funds hold billions of dollars invested by mom and pop investors and the last thing they want to do is upset anyone. Holding cash cushions any market dips ahead, and it positions the manager to snap up good stocks with falling prices.

Notice also the prevalence of value funds on the list. Value managers focus on bargain-priced stocks. If they're holding a lot of cash, it suggests the markets are high and that better deals may be ahead. Less common on the list are mainstream equity funds, which tend to keep just a very small percentage of their assets in cash. Some prominent names that do show up are CI Harbour, Fidelity NorthStar, Altamira Equity and AIM Canadian Premier.

What's ahead for the markets in 2008? Some of the country's successful mutual funds managers seem somewhat wary.

Ranked by cash holding

Fund nameCategory Net assets (000s) (as of Nov. 2007)Last reported holding date% in cashPerformance (as of Nov. 2007) 1-yr quartilePerformance (as of Nov. 2007) 5-yr quartile
Mackenzie Cundill Value 'C'Global Equity6,830,65231-Oct-200724.521
CI HarbourCanadian Focused Equity5,128,92730-Nov-200719.612
CIBC Monthly IncomeCanadian Equity Balanced7,080,96931-Oct-200719.121
CI Signature Canadian BalancedCanadian Equity Balanced1,557,44230-Nov-200717.421
CI Signature Income & GrowthCanadian Equity Balanced2,480,85730-Nov-200716.821
Mackenzie Univ Canadian BalancedCanadian Equity Balanced427,76131-Oct-200716.512
Dynamic Global Value FundGlobal Equity565,97428-Sep-200714.711
Dynamic DividendCanadian Focused Equity501,48328-Sep-200714.512
CI Signature Select CanadianCanadian Focused Equity4,158,42930-Nov-200714.221
CIBC DividendCanadian Dividend & Incm Equity910,87231-Oct-200714.122
Fidelity NorthStar-AGlobal Equity1,664,34229-Jun-200713.321
Fidelity Canadian Asset Alloc.-ACanadian Equity Balanced2,528,39929-Jun-200711.312
TD Monthly IncomeCanadian Equity Balanced4,720,85931-Oct-200710.511
Capital Intl - Global Equity AGlobal Equity1,091,14629-Jun-200710.021
Dynamic Dividend ValueCanadian Focused Equity395,99928-Sep-20079.521
MD DividendCanadian Equity Balanced1,395,80730-Nov-20079.022
Altamira EquityCanadian Focused Equity735,74130-Nov-20079.012
AIM Canadian PremierCanadian Focused Equity827,18531-Oct-20078.721
Manulife Monthly High Income FundCanadian Equity Balanced3,672,86830-Nov-20078.311
Renaissance Canadian Monthly IncomeCanadian Income Trust Equity440,46831-Oct-20078.112
Dynamic Canadian Dividend FundCanadian Focused Equity1,239,44628-Sep-20077.721
TD Dividend IncomeCanadian Equity Balanced3,265,39931-Oct-20077.521
SEI U.S. Large Co. Equity-OU.S. Equity1,068,02631-Oct-20076.722
TD Dividend GrowthCanadian Dividend & Incm Equity2,832,73530-Nov-20076.611
Dynamic Value Fund of CanadaCanadian Focused Equity718,00928-Sep-20076.511
RBC Tax Managed ReturnCanadian Equity Balanced1,863,78631-Aug-20076.522
Ethical GrowthCanadian Focused Equity417,05231-Aug-20076.522


© 2007 The Globe and Mail. All rights reserved.

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