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Mutual Fund News

Largest cash holdings before the bottom fell out

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

Canadian stock mutual funds with the biggest wads of cash before the bottom fell out of the market this fall.

During this volatile time from Aug. 29 to Dec. 22, the S&P/TSX composite index sank 40.1 per cent; the S&P/TSX small cap Index shed 49 per cent and the S&P 500 Index tumbled 32.1 per cent.

TODAY'S SEARCH

We asked Globefund analyst Victor Tan to screen Canadian stock funds for those with the highest cash levels on Aug. 31, and their year-to-date return to Dec. 22. We excluded segregated and pooled funds, and those with less than a one-year track record. We also left out the U.S. dollar and other versions of the funds.

WHAT DID WE TURN UP?

The high cash cushion helped soften the blow of red ink in most cases among small and giant funds.

Four NexGen funds were among the top holders of cash, ranging from just over 32 per cent in NexGen Canadian Growth to 63 per cent in NexGen North American Small-Midcap Cap Fund.

"We move our cash significantly, and we are ... quite comfortable with doing it," said Robert McWhirter, fund manager and president of Selective Asset Management Inc.

He became cautious after the U.S. markets peaked in October, 2007, and "was concerned that the Canadian markets were going to play catch-up on the downside."

The manager, however, has since slashed cash in most of his NexGen funds. For instance, the cash in NexGen Canadian Growth fell to about 13 per cent this week. It had risen to as high as 55 to 60 per cent of the fund this fall.

"We think there is a good opportunity for a significant rally starting now to the end of February," Mr. McWhirter said. "It looks like the market in the near term appears to have discounted the bad news. ... But we think this is a rally in a bear market."

Others have also pared down their cash. The giant CI Harbour fund run by Gerry Coleman had just less than 10 per cent in cash at the end of November compared with 19 per cent on Aug. 31. That fund lost 29.1 per cent as of Dec. 22, compared with the S&P/TSX Composite's 40.4-per-cent loss.

Mackenzie Universal Growth, however, had boosted its cash to 30 per cent by the end of November from 20 per cent on Aug. 31. The fund, which is run by Bluewater Investment Management, lost 25.3 per cent to Dec. 22.

*****

Top 25 Canadian Equity funds with largest cash holdings as of Aug 31/08
(as of Nov '08)Latest(Aug. 31)(as of Dec. 22)% returns (as of Nov. 30, 2008)
Fund nameCategory Assets ($-mil)MER% CashYTD % returnYTD1-yr3-yr5-yr10-yr
NexGen NA Small/Mid Cap-CGCanadian Small or Mid Cap Equity0.62.6563.00-21.3-15.4-13.0
NexGen Cdn Dividend & Income-CGCanadian Dividend and Income Equity0.02.6544.36-15.6-12.0-12.5
Dynamic FocusPlus Small BusinessCanadian Small or Mid Cap Equity53.34.4242.22-22.9-21.5-19.75.612.46.7
NexGen North American Value-CGCanadian Focused Small/Mid Cap Equity0.12.6540.16-30.9-22.7-20.3
Renaissance Millennium Next GenCanadian Small or Mid Cap Equity80.32.5935.51-39.8-36.8-35.7-5.03.9
NexGen Canadian Growth-CGCanadian Focused Small/Mid Cap Equity0.72.6532.45-31.4-25.2-23.4
JOV North American Momentum-ACanadian Focused Small/Mid Cap Equity4.02.9831.79-34.4-33.4-31.4-0.91.9
National Bank Cdn OpportunitiesCanadian Focused Equity161.42.1428.20-32.1-27.6-27.1-5.70.4
JOV Talisman-ACanadian Focused Equity10.82.8127.51-38.5-32.8-29.2-12.5
Lakeview Disp Leadership Cdn Eq-ACanadian Focused Equity134.72.2724.98-23.8-20.1-17.2-0.3
imaxx Canadian Small CapCanadian Small or Mid Cap Equity0.62.8723.83-53.9-49.9-49.8
Lakeview Disp Leadership Hi Inc ACanadian Small or Mid Cap Equity130.62.2622.98-16.7-13.9-12.8-2.1
Fidelity Canadian Growth Company-ACanadian Focused Equity266.42.4622.80-41.5-34.4-32.5-6.12.35.3
Dynamic DividendCanadian Dividend and Income Equity345.21.5822.76-29.0-25.7-25.3-3.64.65.7
Dynamic FocusPlus EquityCanadian Focused Equity215.52.4022.46-24.3-19.8-19.4-4.21.62.7
RBC North American ValueCanadian Focused Equity116.92.0022.04-26.8-23.1-22.7-0.95.76.3
Stone & Co. Growth Industries ACanadian Small or Mid Cap Equity0.53.5721.90-57.7-57.0-57.6-23.5-8.6
NexGen North American Large Cap-CGCanadian Focused Equity0.12.6521.16-27.2-22.9-23.4
NexGen Canadian Large Cap-CGCanadian Focused Equity0.12.6521.01-29.5-23.1-22.8
Mackenzie Univ Canadian GrowthCanadian Focused Equity776.72.3520.39-25.3-19.7-19.6-0.84.14.9
Stone & Co. Div Growth Cls Can ACanadian Dividend and Income Equity111.92.8819.70-28.4-22.1-20.70.17.9
CI HarbourCanadian Focused Equity4,284.92.3019.15-29.1-24.6-25.0-1.46.88.0
BMO Special EquityCanadian Small or Mid Cap Equity193.52.3918.14-51.9-48.5-46.8-5.53.75.9
Renaissance Canadian Monthly IncomeCanadian Income Trust Equity294.61.7415.93-28.0-24.2-22.8-3.76.611.2
Quadrus Sionna Cdn Value ClassCanadian Equity41.52.5415.64-29.3-22.6-21.3
S&P 500 composite -40.6 -39.0 -39.5 -10.5 -3.3 -2.6
S&P/TSX composite index -40.4 -33.0 -32.3 -5.0 3.4 3.9
S&P/TSX Small Cap -53.9 -50.7 -49.8 -18.9 -9.6

SOURCE: GLOBEFUND

© 2007 The Globe and Mail. All rights reserved.

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