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Mutual Fund News

January's winners and losers

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

Leaders and laggards among Canadian stock funds during the January market correction.

The S&P/TSX composite index shed 5.5 per cent last month after rebounding sharply from the March lows. The energy and materials sectors dragged the index into the red.

TODAY'S SEARCH

We screened Canadian equity, focused equity, and dividend and income funds for the biggest gainers and losers. We only included funds operating since Jan. 1, 2009. Segregated, pooled, U.S.-dollar and duplicate versions were excluded.

WHAT DID WE FIND?

The leader is sitting on a mountain of cash.

Sentry Select Diversified Total Return rose to the top of the heap with a 2.1-per-cent gain in January. It got help from a cushion of about 50 per cent in cash - up from 30 per cent a month ago.

"It's a very actively managed fund to try to preserve capital, have a lower-than-average volatility, but also make money for our unitholders," said Andrew McCreath, who has run it since the start of 2009.

"Unlike 2009, where low-quality and high-quality stocks went up, we believe now that high-quality stocks will outperform low-quality stocks. There is money to be made, but you have to pick stocks. You just can't be long the market," the manager said.

His fund, which limits smaller-cap stocks to 15 per cent of the assets and has about 10 per cent in corporate bonds, benefited from owning Athabasca Potash. The fertilizer play was acquired last month by BHP Billiton Canada.

The fund is defensively positioned because Mr. McCreath expects a square-root shaped recovery, characterized by sub-par growth with low inflation.

"Once the fiscal stimulus fades mid-year, we believe the rate of economic growth will fall back to a 1.5-to 2-per-cent rate," he said. "As we look towards 2011, we believe the rate of corporate profit growth will decelerate to a range of 5 to 10 per cent from the 25 per cent we are likely to see this year."

The worst performers included the iShares CDN Large-Cap 60 exchange-trade fund, which lost 6.3 per cent. The index fund doesn't have cash to keep it from sliding in a falling market.

Fidelity Canadian Growth fell further, nearly 7 per cent. Kevin Elliott, who ran it for nearly a year and a half, left the fund this week. It has now being managed by Brandon Snow, who also runs Fidelity Canadian Large Cap Fund.

"[Mr. Elliott] is pursuing another career opportunity - it was his decision," Fidelity Investments Canada spokesman Chris Pepper said. Mr. Snow is the third manager to run the fund since the departure of former Fidelity star Alan Radlo who ran it from 1994 to December, 2006. Mr. Radlo is now with CI Financial.

How Canadian Large-Cap Funds Fared in January
(As of Dec. 31)Latest(Jan. 31)Calendar Year % Returns
Name Assets ($-mil)MER1-mo % rtn20092008200720062005200420032002
Top 15
Sentry Select Diversified Total Rtn31.82.832.131.8-22.42.218.8
EdgePoint Canadian Portfolio FE106.12.800.950.2
Omega Preferred Equity223.41.480.826.6-16.0
Sentry Select Growth & Income89.32.770.526.1
Standard Life Diversified Income-A9.72.44-0.216.3-12.51.51.6
Van Arbor Canadian Advantage2.00-0.2100.2-36.16.68.635.4
Trapeze Value Class0.4-0.345.8
Mackenzie Universal Cdn Value Class205.62.42-0.323.3-27.6-5.912.111.711.510.6-13.8
Claymore S&P/TSX Pref Share ETF-0.526.2-17.1
Trimark Canadian Endeavour863.22.10-0.641.9-36.6-14.719.33.218.222.2-3.2
CI Signature Dividend1,460.71.79-0.932.1-23.0-5.110.811.79.612.9-2.3
Fidelity Canadian Opportunities-A183.12.49-0.960.4-36.612.08.816.816.429.3-4.5
Business Cycle Income-1.016.1
PH&N Canadian Income-D78.01.18-1.142.4-38.88.112.6
AIC Advantage II Corp Class31.62.88-1.643.2-50.4-3.722.214.34.012.4-17.4
Bottom 15
Acuity Dividend80.42.78-7.722.3-33.0-3.915.7
RBC Dominion Secur Cdn Focus List170.72.16-7.213.5-36.412.518.220.918.620.4-10.3
iShares CDN Growth Index39.30.50-7.022.2-29.321.4
Manulife Canadian Equity Fund-A384.02.35-7.030.8-39.88.317.521.912.123.5-14.8
Fidelity Canadian Growth Company-A159.92.47-6.923.1-37.313.08.313.417.224.0-12.6
National Bank Protected Cdn Equ5.63.35-6.521.7-30.64.113.715.75.521.2-18.2
BMO Canadian Equity Class17.02.38-6.321.5-27.38.614.220.1
RBC DS Canadian Focus1,151.42.05-6.325.7-31.58.819.422.2
National Bank Canadian Equity528.32.30-6.322.7-29.44.814.217.06.923.0-17.7
BMO Equity1,791.92.26-6.321.9-27.08.513.920.614.019.3-9.0
Investors Canadian Equity-C2,418.32.85-6.337.6-39.92.412.423.013.117.7-9.5
Dynamic Power Canadian Growth Cls-T2.63-6.351.4
Altamira Canadian Index228.10.52-6.331.2-31.410.618.625.513.324.6-14.2
iShares CDN LargeCap 60 Index11,856.70.17-6.331.5-31.110.921.525.913.625.2-12.5
AGF Canadian All Cap Equity9.52.45-6.316.8
S&P/TSX Composite Index-5.530.7-35.07.214.521.912.524.3-14.0
S&P/TSX Total Return-5.335.1-33.09.817.324.114.526.7-12.4
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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