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Mutual Fund News

Dynamic equity fund toughs out 2010 with Asian focus

swon@globeandmail.com

What are we looking for?

How international equity funds are doing this year. European stocks typically make up a big chunk of these funds, so the fallout from the region's sovereign-debt crisis has made this a tougher year than usual.

The screen

We examined the returns for the first 11 months in these funds, which must invest outside of Canada and the United States. U.S. dollar, segregated, and duplicate versions of funds were excluded.

What did we find?

Big gaps in performance - from double-digit returns to a double-digit loss.

Dynamic EAFE (Europe, Australasia and Far East) Value Class and Omega Consensus International Equity gained, respectively, 15.4 per cent and 10.7 per cent, while AGF International Stock Class shed 15 per cent.

Dynamic EAFE Value benefited from having 60 per cent of its portfolio invested in Asia at the start of the year, but "we have been gradually increasing our exposure to Europe," said manager Chuk Wong of Goodman & Co. Investment Counsel Ltd. "Now, the fund is about 45 per cent Europe and 55 per cent Asia."

Asian stock winners have included Chinese sporting goods retailer 361 Degrees International Ltd. and Indonesian-based PT Bank Rakyat Indonesia and PT Bank Central Asia. Also helping are European stocks such as British-based Lloyds Banking Group PLC and Spanish-based Prosegur Cia de Seguridad SA, which provides security services, Mr. Wong said. "Despite the fact that the Spanish market has done poorly this year, Prosegur is actually up."

AGF International Stock Class, which is run by John Arnold and Rory Flynn, has had a rough ride. The fund was 77 per cent invested in Europe at the end of October. A spokeswoman at AGF Management Ltd. said no one was available to explain why the fund has struggled.

However, Morningstar Canada analyst Brian O'Neill said the AGF fund has been "very disappointing over the last few years, largely due to its heavy financials exposure during the credit crisis." This year, key financial stocks like BNP Paribas and Société Générale "performed poorly, as have some of the fund's holdings in the health care and telecommunications sectors," he said.

***

HOW INTERNATIONAL EQUITY FUNDS HAVE FARED THIS YEAR

As of Oct. 31, 2010
NameLatest MERAssets ($ millions)YTD to Nov 30/101 YR3 YR5 YR10 YR
Best 8 Funds to Nov. 30
Dynamic EAFE Value Class2.6925.815.38%27.62%1.86%N/AN/A
Omega Consensus Intl Equity1.9955.710.65%21.91%N/AN/AN/A
Investors Int'l Small Cap Class-A2.76105.76.99%11.77%-5.70%5.13%N/A
Acuity EAFE Equity2.997.86.23%10.40%-6.91%N/AN/A
CIBC International Small Companies2.871.25.61%8.12%-11.21%-1.81%-1.45%
Leith Wheeler Intl Equity Plus Sr B1.581.74.04%6.93%-1.54%N/AN/A
Ethical International Equity2.9548.13.61%8.55%-8.65%-0.56%N/A
MD International Growth1.94188.33.03%6.16%-5.24%1.13%-2.58%
Worst 8 Funds to Nov. 30
AGF International Stock Class2.98663.9-15.05%-4.00%-11.20%-0.43%0.06%
Beutel Goodman Int'l Equity-D1.4373.5-7.14%0.90%-7.55%-2.35%-1.30%
TD International Value-I2.42545.8-7.08%-1.73%-15.13%-6.70%-6.94%
Templeton EAFE Developed Mkts-F*1.572.9-6.71%3.07%-8.10%-0.60%-0.47%
IG Templeton International Equity-A2.69165.3-6.62%1.19%-9.32%-1.15%N/A
Manulife International Value Class2.86163.1-6.41%0.78%-9.61%-1.91%N/A
Pro FTSE RAFI Global Index-AN/A-6.34%-2.51%-7.67%N/AN/A
Desjardins Overseas Equity Value2.58749.1-6.05%-1.65%-12.94%-3.66%-1.00%
Index Fund1 YR3 YR5 YR10 YR
MSCI EAFE ($ Cdn)N/A2.90%-7.00%0.78%-0.50%
MSCI Europe ($ Cdn)-5.56%2.94%-7.79%1.44%-0.10%
* Formerly Bissett International Equity. Source: Globe Investor

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