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Fresh starts for smaller-company funds


How Canadian smaller-company funds are faring this year.

These funds got creamed last year as many investors, such as hedge fund managers involved in deleveraging and panic selling, jettisoned the riskier and less-liquid stocks in the market meltdown.


We screened for the top 30 best performing Canadian small-to-mid-cap stock funds until this past Thursday. We excluded U.S. dollar, duplicate and pooled funds.


New beginnings.

The Acuity All-Cap 30 Canadian Equity, which shed nearly 58 per cent in 2008 after never losing money in a calendar year since inception, has come out flying with 20.7-per-cent return. The same management team also runs Acuity Canadian Small Cap, up nearly 13 per cent.

For some investors, the recent returns may only mean recouping some of last year's loss. For others who had the nerve to step up to the plate during these funds' darker moments at year end, it's been a nice gain so far.

Smaller-company stocks typically do well early in an economic recovery when interest rates are low and companies have access to funds to invest in their growth. But that is not the main reason why the Acuity and other funds have rebounded, says Hugh McCauley, a manager with Acuity Investment Management Inc.

"It's attributable to fundamentals coming back to the market," he suggested. "Last year, it was fear driven. People sold good stocks and bad stocks.

While Mr. McCauley doesn't seen a new bull market under way, he said that it won't prohibit investors from making money if one owns quality smaller-cap companies that are self-financing. "I would call it [market] range-bound for the next year or two," he said. "I don't think we are in a recovery. This economy has two tough years ahead of it...But we can still make money as fundamentals come back to the market."

Acuity All-Cap 30 Canadian Equity is a concentrated fund that can invest in companies of any market value. Centamin Egypt Ltd., First Uranium Corp., SXC Health Solutions Corp., Consolidated Thomson Iron Ore Mines Ltd. and Research In Motion Ltd. were among the stocks that helped drive the fund.

The Acuity Canadian Small Cap holds some of the same smaller-cap names like Centamin and First Uranium, but it also got a lift from securities like Energy Savings Income Fund, Com Dev International Ltd. and Daylight Energy Trust. Mr. McCauley suggested that contributions from Acuity's winners are not over. "If these stocks are winning in a bad market, what happens in a good market?"


Top 30 Canadian small-mid cap stock funds to April 2, 2009
(As of Feb '09)Latest(April 2)Calendar Year % Returns
Fund nameCategory Assets ($-mil)MERYTD % rtn20082007200620052004
Acuity All Cap 30 Canadian EquityCdn Foc. Sm/Md Cp Eq186.12.9120.7 -57.7 13.6 26.2 10.1 21.3
Front Street Small Cap-ACdn Sm/Md Cp Eq0.62.5016.8 16.3
Sprott Small Cap Equity-ACdn Sm/Md Cp Eq78.05.9214.7 -53.1
Saxon Microcap-ISCdn Sm/Md Cp Eq1.72.9214.4 -41.1
Frk Tmp Canadian Small CapCdn Sm/Md Cp Eq0.62.7814.1 -61.0 5.5 28.6 18.9
Acuity Canadian Small CapCdn Sm/Md Cp Eq57.32.9412.8 -59.0 9.4 37.2
Galileo FundCdn Foc. Sm/Md Cp Eq2.0111.0 -52.4 20.2
CDA Aggressive Equ (Altamira)Cdn Sm/Md Cp Eq1.0010.6 -46.8 -4.5 12.4 8.1 8.7
Small & Medium Entreprise Gro StockCdn Sm/Md Cp Eq33.52.889.1 -44.0 3.2 4.0 3.5 14.4
Sprott GrowthCdn Foc. Sm/Md Cp Eq84.05.798.8 -62.6 35.1
Raymond James Canadian Focus PicksCdn Sm/Md Cp Eq0.76.478.4
Mavrix Strategic Small CapCdn Sm/Md Cp Eq9.83.068.0 -50.6 1.4 60.4 45.0 23.5
Stone & Co. Growth Industries ACdn Sm/Md Cp Eq0.53.578.0 -55.3 -2.1 4.3 5.5 32.2
Scotia Canadian Small CapCdn Sm/Md Cp Eq30.92.418.0 -47.9 -0.8 10.6 22.2 11.8
Beutel Goodman Small CapCdn Sm/Md Cp Eq173.91.256.8 -29.0 2.0 20.9 9.9 13.5
IG Beutel Goodman Cdn. Small-Cap-CCdn Sm/Md Cp Eq163.73.106.6 -30.7 0.4 19.1 8.2 11.9
AGF Canadian Small CapCdn Sm/Md Cp Eq166.82.736.3 -47.1 16.4 28.9 23.5 11.7
PH&N Vintage-DCdn Foc. Sm/Md Cp Eq31.91.796.1 -55.9 12.8 8.2 17.7 10.2
Brickburn Small Cap Class-MFCdn Sm/Md Cp Eq3.14.995.9
AGF Canadian Growth EquityCdn Sm/Md Cp Eq516.82.915.9 -48.1 8.6 18.9 25.6 7.4
IG AGF Cdn Diversified Growth-CCdn Sm/Md Cp Eq134.73.105.8 -47.0 8.4 18.4 25.1 7.5
GWL Growth Equity (A) NLCdn Sm/Md Cp Eq14.73.325.7 -46.6 8.2 18.2 25.1 7.3
National Bank Small CapitalizationCdn Sm/Md Cp Eq300.72.355.7 -37.6 6.9 14.6 2.8 9.6
Fidelity Special Situations-ACdn Foc. Sm/Md Cp Eq67.72.495.6 -33.2
Empire Small Cap Equity-Class ACdn Sm/Md Cp Eq211.32.565.4 -46.2 8.2 23.5 14.5 15.7
Clarica SF Growth-DSCCdn Sm/Md Cp Eq3.12.925.3 -41.5 4.1 9.8 18.8 16.8
TD Cdn Small-Cap EquityCdn Sm/Md Cp Eq273.42.425.3 -39.0 2.2 8.7 12.0 5.5
Sceptre Equity Growth-OCdn Sm/Md Cp Eq49.15.2 -53.3 18.1 40.5 21.3 27.0
SEI Canadian Small Company Equity-OCdn Sm/Md Cp Eq86.50.175.2 -45.4 9.5 17.7 20.7 17.0
Investors Canadian Small-Cap Cls-ACdn Sm/Md Cp Eq32.22.675.1 -42.5 16.0 2.5 16.8 10.4
BMO Nesbitt Burns Cdn Small Cap Index-46.6 2.0 16.6 19.7 14.1
S&P/TSX Composite Index1.0 -35.0 7.2 14.5 21.9 12.5
S&P/TSX Venture Composite22.7 -71.9 -4.9 33.6 22.5 4.2
S&P/TSX Small Cap-1.3 -47.9 -2.9 6.7 8.9 5.8

© 2007 The Globe and Mail. All rights reserved.

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