WHAT ARE WE LOOKING FOR?
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.
WHAT DID WE FIND?
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 name||Category Assets ($-mil)||MER||YTD % rtn||2008||2007||2006||2005||2004|
|Acuity All Cap 30 Canadian Equity||Cdn Foc. Sm/Md Cp Eq||186.1||2.91||20.7||-57.7||13.6||26.2||10.1||21.3|
|Front Street Small Cap-A||Cdn Sm/Md Cp Eq||0.6||2.50||16.8||16.3|
|Sprott Small Cap Equity-A||Cdn Sm/Md Cp Eq||78.0||5.92||14.7||-53.1|
|Saxon Microcap-IS||Cdn Sm/Md Cp Eq||1.7||2.92||14.4||-41.1|
|Frk Tmp Canadian Small Cap||Cdn Sm/Md Cp Eq||0.6||2.78||14.1||-61.0||5.5||28.6||18.9|
|Acuity Canadian Small Cap||Cdn Sm/Md Cp Eq||57.3||2.94||12.8||-59.0||9.4||37.2|
|Galileo Fund||Cdn Foc. Sm/Md Cp Eq||2.01||11.0||-52.4||20.2|
|CDA Aggressive Equ (Altamira)||Cdn Sm/Md Cp Eq||1.00||10.6||-46.8||-4.5||12.4||8.1||8.7|
|Small & Medium Entreprise Gro Stock||Cdn Sm/Md Cp Eq||33.5||2.88||9.1||-44.0||3.2||4.0||3.5||14.4|
|Sprott Growth||Cdn Foc. Sm/Md Cp Eq||84.0||5.79||8.8||-62.6||35.1|
|Raymond James Canadian Focus Picks||Cdn Sm/Md Cp Eq||0.7||6.47||8.4|
|Mavrix Strategic Small Cap||Cdn Sm/Md Cp Eq||9.8||3.06||8.0||-50.6||1.4||60.4||45.0||23.5|
|Stone & Co. Growth Industries A||Cdn Sm/Md Cp Eq||0.5||3.57||8.0||-55.3||-2.1||4.3||5.5||32.2|
|Scotia Canadian Small Cap||Cdn Sm/Md Cp Eq||30.9||2.41||8.0||-47.9||-0.8||10.6||22.2||11.8|
|Beutel Goodman Small Cap||Cdn Sm/Md Cp Eq||173.9||1.25||6.8||-29.0||2.0||20.9||9.9||13.5|
|IG Beutel Goodman Cdn. Small-Cap-C||Cdn Sm/Md Cp Eq||163.7||3.10||6.6||-30.7||0.4||19.1||8.2||11.9|
|AGF Canadian Small Cap||Cdn Sm/Md Cp Eq||166.8||2.73||6.3||-47.1||16.4||28.9||23.5||11.7|
|PH&N Vintage-D||Cdn Foc. Sm/Md Cp Eq||31.9||1.79||6.1||-55.9||12.8||8.2||17.7||10.2|
|Brickburn Small Cap Class-MF||Cdn Sm/Md Cp Eq||3.1||4.99||5.9|
|AGF Canadian Growth Equity||Cdn Sm/Md Cp Eq||516.8||2.91||5.9||-48.1||8.6||18.9||25.6||7.4|
|IG AGF Cdn Diversified Growth-C||Cdn Sm/Md Cp Eq||134.7||3.10||5.8||-47.0||8.4||18.4||25.1||7.5|
|GWL Growth Equity (A) NL||Cdn Sm/Md Cp Eq||14.7||3.32||5.7||-46.6||8.2||18.2||25.1||7.3|
|National Bank Small Capitalization||Cdn Sm/Md Cp Eq||300.7||2.35||5.7||-37.6||6.9||14.6||2.8||9.6|
|Fidelity Special Situations-A||Cdn Foc. Sm/Md Cp Eq||67.7||2.49||5.6||-33.2|
|Empire Small Cap Equity-Class A||Cdn Sm/Md Cp Eq||211.3||2.56||5.4||-46.2||8.2||23.5||14.5||15.7|
|Clarica SF Growth-DSC||Cdn Sm/Md Cp Eq||3.1||2.92||5.3||-41.5||4.1||9.8||18.8||16.8|
|TD Cdn Small-Cap Equity||Cdn Sm/Md Cp Eq||273.4||2.42||5.3||-39.0||2.2||8.7||12.0||5.5|
|Sceptre Equity Growth-O||Cdn Sm/Md Cp Eq||49.1||5.2||-53.3||18.1||40.5||21.3||27.0|
|SEI Canadian Small Company Equity-O||Cdn Sm/Md Cp Eq||86.5||0.17||5.2||-45.4||9.5||17.7||20.7||17.0|
|Investors Canadian Small-Cap Cls-A||Cdn Sm/Md Cp Eq||32.2||2.67||5.1||-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 Index||1.0||-35.0||7.2||14.5||21.9||12.5|
|S&P/TSX Venture Composite||22.7||-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|
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