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Mackenzie's Europe funds: A study in contrasts

swon@globeandmail.com

What are we looking for?

How European equity funds have fared over the past five years.

With Ireland seeking a bailout from its debt woes as Greece has done, let's see how funds investing in Europe have done over the longer term.

The screen

We looked at the eight best and worst performers for the five years ended Oct. 31. U.S. dollar, segregated and duplicate versions of funds were excluded, as well as those only sold to a specific association.

What did we find?

Mackenzie Financial Corp. emerged with both the star and dog among European equity funds over five years.

Mackenzie Ivy European Class, run by Paul Musson and his in-house Ivy team, was the leader with an annualized return of 5.3 per cent. But Mackenzie Universal European Opportunities Fund, which is managed by British-based Henderson Global Investors Ltd., lost an average of 3.5 per cent a year over the same time period.

The big performance gap spurred Mackenzie to recently announce plans for the Mackenzie Ivy European team to take over Mackenzie Universal European Opportunities. Mackenzie could not provide anyone last week to explain in detail why the latter fund has stumbled. Venkat Kannon, the firm's chief financial officer of funds, would only say the problem was "stock selection," and "the Ivy team change will be in the best interest of our investors."

Mackenzie Universal European Opportunities, which shed 8 per cent this year to Nov. 12, has not recovered from its 37-per-cent loss in the 2008 market meltdown. In a Sept. 30 commentary, Paul Casson, who took over as manager from Stephen Peaks in 2006, indicated that the fund's holdings in beat-up bank stocks hurt this year.

"We have further reduced our holdings in the sector and it is now our largest underweight [position]," he wrote.

Mackenzie Ivy European, which held 22 per cent in cash and 43 per cent in consumer staples stocks at the end of October, has had a defensive approach since it was launched in 2002.

Mackenzie Universal European Opportunities, which debuted in 1994, is more volatile, and has had more exposure to areas such as financials and energy, said Morningstar Canada analyst Brian O'Neill.

Mr. O'Neill called the fund's move to the Ivy management approach "a significant change for unitholders."

***

HOW EUROPEAN EQUITY FUNDS HAVE FARED OVER FIVE YEARS

Fund NameLatestMEROct. 31Assets ($-mil)Oct. 315-yr % rtnNov. 12YTD % rtnCalendar year % returns
20092008200720062005
Best 8
Mackenzie Ivy European Class2.5012.25.331.677.65-8.17-1.6526.31-2.57
IG Mackenzie Ivy European-A2.69228.05.211.487.48-8.12-1.8026.23-2.77
Fidelity Europe-A2.6038.54.525.4410.16-37.0018.0934.7711.39
Investors Euro Mid-Cap Equity-A2.69814.23.352.7727.36-41.19-6.2848.8013.70
Invesco European Growth Class2.8434.32.194.8215.98-35.44-3.7936.536.85
CIBC European Equity2.54200.91.87-0.8014.58-24.33-5.7828.004.36
Dynamic European Value2.4759.00.388.8928.68-38.30-19.2836.425.68
CIBC European Index1.1459.00.26-0.0311.42-31.57-3.6431.485.23
Worst 8
Mackenzie Univ European Opport2.45137.6-3.53-7.989.86-37.41-5.5429.124.87
Altamira European Equity2.3536.6-2.981.207.69-37.24-4.1527.563.84
Standard Life European Equity-A2.4210.2-2.86-1.6416.66-38.21-10.0130.356.63
AGF European Equity Class3.13503.6-2.76-13.0415.10-36.58-11.7540.9610.04
RBC European Equity2.151,659.3-2.69-0.679.24-34.91-1.0420.473.96
Scotia European2.6320.2-2.321.7810.48-38.12-7.5931.134.60
CI European2.3957.7-1.98-0.469.66-41.50-1.4335.686.10
HSBC European-I2.4049.3-1.77-1.5615.31-36.95-7.0132.885.81
MSCI Europe ($ Cdn)n/an/a1.44n/a16.18-32.55-2.9833.847.18
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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