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Mutual Fund News

Expect to wait for fallen financials' upturn


Funds with the biggest wad of financial services stocks.

The sector has been whacked as banks, insurers and brokers take writedowns related to the U.S. subprime mortgage mess. And stocks of mutual fund company and investment firms have been beaten up in tandem with market pullbacks and falling cash inflows.


We examined all funds except ones in the real estate category, as real estate investment trusts can sometimes be treated as financial stocks. We also excluded U.S.-dollar, pooled and corporate-class version of funds.


Lots of red ink in 2007 and to the end of February, 2008.

Among the top 20 funds with the heaviest financial holdings, value investing shop AIC Ltd. runs six of them.

Within the group, it is no surprise that funds listed in the financial services category have taken the biggest hits. Currency has also taken a bite out of foreign stock funds that have not been hedged.

The iShares Canadian Financial Sector exchange-traded fund - helped out by its low management fee - lost the least money among its financial services equity fund peers. It fell 8 per cent in the 14 months ended Feb. 29.

But AIC American Advantage, which held losers like Merrill Lynch and American International Group, lost 36 per cent for the same period. AIC Global Advantage, which owned stocks like UBS AG and American International Group, shed 38 per cent.

Investors Global Financial Services, dragged down by stocks like Bank of America and UBS AG, sank 37 per cent. Fidelity Focus Financial Service, which also held American International Group, tumbled 28 per cent. And CIBC Financial Companies Fund, pulled down by bank stocks like Canadian Imperial Bank of Commerce, was off 22 per cent.

Most diversified stock and dividend funds with big financial holdings were also in the red, but their investors did not suffer as much pain.

As the fallout from the global credit crunch worsened and some analysts slashed targets for financial stocks, AIC took a contrarian move. Last month, it launched three new financially focused funds - AIC Global Banks, AIC Global Insurance and AIC Global Wealth Management. Obviously, the firm expects they will ride the inevitable upturn in the battered sector.

There is no doubt that fallen financials can be a opportunity for investors. But if Sprott Asset Management founder and hedge fund manager Eric Sprott - whose firm has been short-selling financial stocks - is right, it could be a wait.

Funds with the most exposure to financials

Assets ($-mil)WeightingsPerformance (% Return)
Fund nameCategoryAs of Feb. 2008MERIn financialsYTD2007200620052004200320022001
AIC American AdvantageFinancial Services58.962.7699.94-14.31-21.8712.288.70-4.713.09-17.50-9.26
iShares CDN Financial Sector IndexFinancial Services 507.410.5599.21-6.84-1.2821.2523.1819.1427.18-3.00
CIBC Financial Cos.Financial Services 232.592.6197.83-10.38-11.7317.2915.0510.6518.89-10.07-4.44
AIC Global AdvantageFinancial Services 58.202.7891.63-14.84-23.5122.
Caldwell ExchangeGlobal Equity25.842.7590.63-17.3639.56
Investors Glo Financial Svc.-AFinancial Services 42.102.7589.40-12.87-24.3329.6311.665.01
AIC AdvantageCanadian Focused820.172.5085.75-15.31-3.2423.8814.805.8016.92-22.19-3.97
AIC Advantage IICanadian Focused581.982.7585.75-15.42-3.4123.2814.045.6916.24-21.53-5.54
Dynamic FocusPlus Wealth Mgmt.Financial Services 200.752.6080.69-11.01-5.1913.5226.7412.2723.28-13.51-3.21
Fidelity Focus Financial Svc.-AFinancial Services 20.382.6568.85-11.16-17.0026.7622.377.996.59-14.36-4.89
AIC Dividend IncomeCanadian Focused227.342.4356.98-6.44-4.677.5220.23
CI Signature DividendCanadian Focused1,772.551.8056.55-2.12-5.0910.8411.669.5812.90-2.315.71
AIC Diversified CanadaCanadian Focused1,133.242.4855.14-8.08-5.1915.4010.534.3313.57-14.78-1.62
Investors Dividend-ACanadian Balanced12,656.922.6953.19-4.32-3.239.6515.839.68
Mavrix Dividend & IncomeCanadian Small or Mid Cap193.092.1452.45-4.70-4.976.526.7320.9228.888.1215.57
TD Dividend GrowthCanadian Dividend & Income 2,750.681.9452.36-3.741.3515.8723.7916.7924.22-2.564.50
OTG DividendCanadian Dividend & Income 1.2552.16-5.442.1014.2521.9112.5417.62-1.974.38
Investors Cdn Large Cap Value-ACanadian Dividend & Income 2,604.542.6950.62-5.231.2112.1026.1713.62
Standard Life Cdn Dividend Gwth-ACanadian Dividend & Income 2,068.721.9349.94-5.764.1611.9821.3615.4119.28-3.646.11
Claymore Dividend & Incm ETFCanadian Dividend & Income 24.440.6049.82-7.026.33
S&P/TSX Composite -1.81 7.16 14.51 21.91 12.48 24.29 -13.97 -13.94
S&P 500 Composite -9.38 3.53 13.62 3.00 8.99 26.38 -23.37 -13.04
MSCI World ($ Cdn) -8.88 -7.10 20.58 6.58 7.33 9.44 -20.20 -11.38


© 2007 The Globe and Mail. All rights reserved.

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