WHAT ARE WE LOOKING FOR?
Canadian equity balanced funds at the top of the performance chart in 2009.
Balanced funds, which own stocks and bonds, have been hot sellers as markets have rebounded. Canadian equity balanced funds must have at least 60 per cent in equities.
We screened for the top 30 funds in this category last year. U.S. dollar, segregated, pooled and duplicate versions of the funds were excluded as well as those with less than a one-year track record.
WHAT DID WE FIND?
A few balanced funds surprisingly outpaced the S&P/TSX Total Return of 35 per cent. Let's look under the hood at their strategies.
Investors Canadian Balanced Fund, which was 70-per-cent invested in equities, led the pack with a 45.6-per-cent gain.
The stellar return was fuelled by focusing on economically sensitive sectors like energy, materials and U.S. deep cyclicals like United States Steel Corp., Dow Chemical Co. and Alcoa Inc. "We have been riding the recovery," said fund manager Dom Grestroni.
Base metals giant Teck Resources Ltd. "has probably been the top performer in the fund," he added.
The fund has sold all but a small position in one Canadian bank, and shifted to asset managers, life insurers and U.S. retail banks within the financial sector, Mr. Grestroni said.
On the fixed-income side, the fund is invested mainly in short-term government bonds. "We are concerned about rising interest rates," he added.
Edgepoint Canadian Growth & Portfolio, co-managed by Tye Bousada and Geoff MacDonald, came second with a 40.4-per-cent return.
But they took a different strategy, investing in corporate instead of government bonds. "We did not see the rationale of putting clients' money to work owning pieces of paper only yielding 2 to 3 per cent," Mr. MacDonald said.
After the meltdown, "if you thought the world was not coming to an end, there was an incredible buying opportunity," he said.
The fund was 68- to 70-per-cent invested in stocks last year. Communications company TVA Group Inc., and private equity firm Onex Corp. contributed to performance. The managers try to buy businesses that can double their size over five to seven years, but do so at a "value price," Mr. Bousada said.
During last year's market volatility and economic downturn, some managers might have taken comfort in buying defensive stocks like grocery, telecommunications or pharmaceutical and health-care companies, he said.
"Whenever everyone is doing the same thing in the equity markets, it's usually a recipe to lose money. ...We looked for different ideas."
|Top 30 Canadian Equity Balanced Funds as of Dec. 31, 2009|
|(As of Nov. 30)||Latest||% returns|
|Fund name Assets ($-mil)||MER||2009||2008||2007||2006||2005||2004||2003||2002||2001||Incpt|
|Investors Canadian Balanced-C||1,580.7||2.85||45.6||-27.7||0.5||7.5||16.7||8.9||11.6||-1.9||2.3||6.4|
|EdgePoint Canadian G&I Portfolio FE||80.9||2.69||40.4||37.1|
|Fidelity Monthly High Income-A||70.0||2.25||39.1||-21.7||4.4||13.0||9.4|
|Dynamic Diversified Real Asset||113.0||2.53||38.8||-27.8||3.2||23.1||8.8|
|imaxx Canadian Fixed Pay||177.1||2.61||35.2||-25.9||10.6||-1.6||7.0||21.0||26.7||8.2|
|Acuity Canadian Balanced||101.1||2.93||33.7||-28.8||1.8||10.3||12.8||9.9||34.4||-0.5||-2.5||6.9|
|Acuity Social Values Balanced||62.0||2.94||33.2||-31.6||9.1||4.4||15.4||14.1||26.5||-13.6||-6.5||7.3|
|TD Dividend Income-I||3,282.3||1.92||30.8||-28.8||0.1||13.2||16.7||13.4||20.3||0.6||7.0||9.7|
|TD Monthly Income||4,099.7||1.40||30.7||-23.4||3.1||11.4||13.4||14.0||21.3||9.5||9.7||8.2|
|National Bank Monthly Income||226.4||1.67||29.9||-22.4||2.7||8.5||14.9||11.9||6.8|
|Mackenzie Saxon Balanced-SI||265.4||1.99||27.8||-23.6||4.2||9.0||11.2||10.5||17.8||3.0||18.6||7.4|
|Lakeview Disp Leadership Hi Inc A||178.2||2.26||27.8||-14.3||6.0||-0.8||22.8||10.4|
|Brandes Sionna Diversified Income||27.5||2.15||27.3||-29.4||-3.9||-4.8|
|TD Diversified Monthly Income-I||558.0||2.18||27.2||-25.6||2.7||8.7||9.7||8.1||12.6||-8.0||-6.6||6.6|
|FMOQ Monthly Income||51.5||0.95||25.6||-17.4||9.4||4.3|
|BMO GDN Can Divers Mthly In-M||365.9||2.30||25.5||-22.7||0.5||6.2||11.2||12.4||4.9|
|CIBC Very Aggress Portfolio RSP-615||25.5||-24.9||0.6||11.5||12.9||6.7||13.7||-10.1||-2.8||4.1|
|Axiom Canadian Growth Portfolio||57.1||2.42||25.3||-26.2||5.6||9.4||3.6|
|Meritage Equity Income Portfolio||24.2||2.61||25.2||-21.1||-1.4||0.1|
|Trimark Select Balanced||1,327.5||2.33||24.9||-18.7||-8.9||12.5||6.9||7.2||15.5||-6.8||4.6||7.0|
|Fidelity Canadian Asset Alloc.-A||1,826.2||2.38||24.5||-19.4||5.9||11.7||14.0||10.7||13.8||-5.5||-0.9||9.6|
|Trimark Diversified Income Class-T8||613.0||2.09||24.5||-19.4||-2.1||14.3||10.3||8.8||10.3||-6.1||-3.3||5.6|
|ROI Canadian Retirement Series A||44.6||24.2||-33.4||6.8||-1.9|
|Quadrus Trimark Balanced Fund||81.6||2.61||24.2||-18.7||-9.1||11.4||5.4||5.7||3.1|
|CI Cambridge Cdn Asset All. CC||277.6||2.34||23.9||-20.0||-0.5|
|Axiom Long-Term Growth Port-Elite||1.54||23.0||-24.9||3.2||0.9|
|Desjardins Dividend Income||664.2||2.05||22.9||-25.1||1.4||10.2||14.6||14.1||18.4||-2.9||2.4||7.7|
|BonaVista Global Balanced-D||4.5||1.25||22.7||-19.8||1.1|
|DEX Universe Bond Total Return Index||5.4||6.4||3.7||4.1||6.5||7.1||6.7||8.7||8.1|
|S&P/TSX Total Return||35.1||-33.0||9.8||17.3||24.1||14.5||26.7||-12.4||-12.6|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.