WHAT ARE WE LOOKING FOR?
Some fund managers worry the recent rally is a bounce in a bear market. And they are hoarding cash to reduce risk, and keep their powder dry for better buying times.
The S&P/TSX Composite Index and the S&P 500 Index have swiftly climbed about 20 per cent from their depressing lows in early March.
Globefund analyst Tony Chan screened stock and balanced funds for those with the highest cash levels. The chart includes only firms that had submitted data for March 31. We excluded funds in the alternative strategies, retail venture capital and miscellaneous categories. We also left out duplicate and U.S. dollar funds.
WHAT DID WE FIND?
Piles of cash - up to 40 per cent. They can be found in everything from small- and large-company stock funds to various balanced and natural resource investments.
CIBC's Renaissance Millennium Next Generation, which is run by Leslie Williams, was sitting on 40-per-cent cash by quarter end. He does not believe Canadian equity markets have bottomed and are in a recovery trend. The fund's top holdings also include gold and silver investments such as Franco-Nevada Corp., SPDR Gold Shares, iShares COMEX Gold Trust and iShares Silver Trust.
AGF Canadian Balanced, run by Christine Hughes, has roughly a third of her fund in cash, equities and bonds. She has been bearish since 2007, and doesn't believe the rally is for real. "Bear markets, especially ones that come after a 25-year debt binge, don't wrap up in 12 months," she said.
AIC Dividend Income, AIC Canadian Focused and AIC Canadian Balanced - all managed by James Cole - have cash levels ranging from 32 per cent to 20 per cent. "This is clearly the worst recession since the early 1990s," Mr. Cole said. "We've had the big move off the bottom. I don't think stock markets are going to run away from me while I take time to make the right investment decisions."
AIC Canadian Focused is now 30 per cent in cash after selling stocks such as Suncor Inc. into the rally. "The best time to sell is not always the best time to buy," he said.
His fund was also sitting in 30-per-cent cash last August just before the market collapsed, but had reduced it to 10 per cent by year-end. While the fund still lost 27 per cent in 2008, it outperformed the broader Canadian market's 35-per-cent loss.
"You can put me in the same cautious camp," Mr. Cole said. "We've just seen one of the biggest increases in the history of stock markets ... in seven weeks. This period most resembles the early 1990s when the market bottomed. It was up for the first six months and then it spent two years going nowhere."
Fund cash positions at March 31, 2009
|As of March 31, 2009|
|Net Assets||% in||YTD||2008||2007||2006||2005|
|Fund name||Category||MER||($-mil)||Cash||% rtn||% rtn||% rtn||% rtn||% rtn|
|Renaissance Millennium Next Gen||Cdn Sm/Md Cap Equity||2.52||73.9||40.1||-4.6||-35.8||15.6||13.2||18.9|
|Stone & Co. Growth Industries A||Cdn Sm/Md Cap Equity||3.57||0.5||39.6||8.8||-55.3||-2.1||4.3||5.5|
|Renaissance Millennium High Income||Cdn Sm/Md Cap Equity||2.36||495.3||38.2||-5.4||-31.5||5.3||2.9||24.6|
|AIC Dividend Income||Cdn Div & Incm Equity||2.36||129.0||32.2||-0.9||-27.0||-4.7||7.5||20.2|
|AGF Canadian Balanced||Cdn Neutral Balanced||2.51||1,200.8||29.6||1.5||-7.4||3.1||14.9||12.6|
|AIC Canadian Focused||Cdn Focused Equity||2.42||252.4||29.5||0.0||-27.1||-12.8||10.6||24.2|
|Middlefield Canadian Balanced Class||Cdn Neutral Balanced||2.67||7.2||28.7||0.5||-22.3||4.3||4.0||26.2|
|Mackenzie Cundill Cdn Balanced 'C'||Cdn Neutral Balanced||2.35||1,061.0||28.3||-6.8||-17.6||-0.2||6.6||8.4|
|CIBC Balanced Index||Cdn Fixed Incm Balanced||1.04||26.5||26.7||-2.1||-13.8||2.6||10.7||10.7|
|Mackenzie Univ Canadian Growth||Cdn Focused Equity||2.35||722.4||25.9||-3.1||-20.7||6.5||11.4||8.4|
|CI Signature High Income||Global Neutral Balanced||1.52||2,411.8||24.0||-1.2||-21.5||0.1||6.7||16.6|
|Compass Conservative Portfolio||Global Fixed Incm Balanced||1.41||63.5||22.9||-1.1||-5.4||1.2||4.5||4.9|
|CI Harbour Growth & Income||Cdn Neutral Balanced||2.31||6,622.7||22.8||-0.3||-19.7||3.8||11.2||17.3|
|United Intl Equity Diversif Pl-W||International Equity||0.23||51.8||22.2||-16.0||-34.6||-6.0||29.5||12.9|
|Mackenzie Univ Canadian Balanced||Cdn Neutral Balanced||2.35||497.0||21.5||-2.2||-12.1||7.1||8.3||7.8|
|Altamira Precision US Curr Neutral||U.S. Equity||0.54||68.5||21.4||-12.3||-40.1||3.2||13.6||3.3|
|United Enhanced Income Pool-W||Global Neutral Balanced||0.21||97.0||20.9||-0.4||-19.7||1.2||7.3|
|Renaissance Cdn. Asset Allocation||Tactical Balanced||2.56||95.3||20.3||-2.2||-26.8||2.2||8.9||10.3|
|CI Harbour Fgn Gr & Income Corp Cl||Global Eq Balanced||2.36||130.8||19.8||-4.3||-29.3||-0.9||13.0||1.6|
|AIC Canadian Balanced||Cdn Neutral Balanced||2.46||93.2||19.7||0.0||-18.6||-9.7||7.7||18.2|
|National Bank Conservative Diversif||Cdn Fixed Incm Balanced||1.76||52.9||19.6||-0.5||-3.2||1.8||4.3||4.9|
|CI Signature Select Canadian||Cdn Focused Equity||2.31||2,795.8||19.4||-3.3||-26.0||3.0||21.0||22.9|
|Credential Select Conservative Port||Global Fixed Incm Balanced||2.55||16.6||19.0||-0.1||-11.8||-2.2||9.3||3.7|
|CI Signature Global Energy Corp Cl||Natural Resources Equity||2.35||122.8||19.0||-0.5||-30.1||12.4||6.1||61.6|
|CI Signature Canadian Resource||Natural Resources Equity||2.31||451.7||18.9||4.7||-29.6||18.9||28.1||49.8|
|CIBC Global Equity||Global Equity||2.75||61.0||18.4||-10.1||-25.7||-7.3||15.7||3.1|
|Credential Select Balanced Port.||Global Neutral Balanced||2.65||75.6||18.4||-1.2||-19.3||-1.2||11.2||6.6|
|Mackenzie Ivy European Class||European Equity||2.50||9.1||18.2||-6.7||-8.2||-1.7||26.3||-2.6|
|Mackenzie Cundill Recovery 'C'||Global Small/Mid Cap Equity||2.44||765.8||17.7||-5.6||-53.8||27.1||23.3||20.3|
|CI Global Balanced Corporate Class||Global Equity Balanced||2.37||177.3||17.0||0.0||-23.0||-9.3||14.2||2.6|
|MSCI World (Cdn)||-9.2||-26.1||-7.1||20.6||6.6|
|S&P/TSX Composite Index||-3.0||-35.0||7.2||14.5||21.9|
|BMO Nesbitt Burns Cdn Small Cap Index||1.3||-46.6||2.0||16.6||19.7|
|SOURCE: GLOBE INVESTOR|
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