What are we looking for?
Leaders and laggards among global small-to-mid cap equity funds this year.
Smaller names tend to get beat up more than their larger peers in market downdrafts. Let's see how these funds have fared amid the volatility created by Europe's debt crisis and fears of slower global growth.
We ranked the eight best and eight worst returns this year to Oct. 26. U.S. dollar, segregated and duplicate versions of the funds were excluded.
What did we find?
A few funds clinging to positive returns amid a sea of red.
Trimark Global Endeavour topped the list with a 4.3-per-cent gain followed closely by its sister fund, Trimark Global Small Companies, with a 4.2-per-cent return.
The Global Endeavour fund has held up "partly because we had three takeouts," said lead manager Jeff Hyrich of Invesco Canada Ltd. They include the acquisitions of U.S. medical-device maker Kinetic Concepts Inc., British tool maker Charter International (deal still to close) and the 51-per-cent purchase of South African retailer Massmart Holdings Ltd. by Wal-Mart Stores Inc.
The fund had little or no exposure to hard-hit resource or European bank stocks, while long-term holdings like U.S. retailer Ross Stores Inc. continued to do well, said Mr. Hyrich, who looks for undervalued companies with strong balance sheets and decent growth prospects.
Webb Enhanced Growth shed the most red ink with a 44-per-cent loss. Derek Webb of Webb Asset Management took over the fund recently from another manager who is no longer with the firm. "Obviously, it was a disaster," said Mr. Webb, who looks for stocks with accelerating earnings.
Earnings momentum stocks got crushed, but "now those names are coming back with a vengeance," he said. The fund was also hurt from a big bet on resource stocks, but he has sold most of them. Instead, he has been buying growth names like Apple, Google, Diamond Foods, Discovery Financial Group, Foot Locker and Boeing.
But aren't these larger-cap stocks?
The fund is in the global small-cap category, but that is not the goal, he said.
"We practice earnings momentum. That might bring you to small stocks, or that might bring you to large-cap names."
LEADERS AND LAGGARDS AMONG GLOBAL SMALL-MID CAP EQUITY FUNDS THIS YR TO OCT. 26
|% rtn since|
|Last reported||YTD % rtn||YTD % rtn||inception||Periods ending Sept 30, 2011|
|Fund name||MER||assets ($-mil)||(to Oct. 26)||(to Sep. 30)||(to Sep. 30)||1-yr % rtn||3-yr % rtn||5-yr % rtn||10-yr % rtn|
|Trimark Global Endeavour||2.61||614.1||4.3||0.9||5.7||8.6||11.6||0.6||5.5|
|Trimark Global Small Co Class A||2.46||26.0||4.2||-3.8||-5.0||6.7||9.9||n/a||n/a|
|Mawer Global Small Cap||1.85||20.7||0.1||-1.5||2.1||6.5||11.4||n/a||n/a|
|Manulife Global Small Cap Fd||2.77||62.6||-0.2||-2.7||6.6||4.6||11.2||n/a||n/a|
|BMO GDN Glbl Small Cap Classic||2.75||0.5||-5.8||-12.8||4.2||-5.0||-0.8||-6.0||2.4|
|Webb Enhanced Growth||6.69||3.1||-44.1||-41.6||-13.9||-33.4||-8.8||n/a||n/a|
|Redwood Global Small Cap||3.10||21.8||-37.9||-41.0||4.9||-18.3||18.5||n/a||n/a|
|Mackenzie Cundill Global Div-T5||2.53||27.9||-25.1||-31.2||-2.3||-28.6||-12.9||-11.7||-5.9|
|Mackenzie Cundill Recovery 'C'||2.58||1,160.7||-24.8||-29.1||9.2||-19.5||0.2||-1.8||9.5|
|NexGen Global Value-CG||2.79||0.3||-19.2||-19.2||-7.3||-6.7||1.0||n/a||n/a|
|Templeton Global Smaller Co||2.90||412.1||-18.3||-19.4||7.6||-13.7||3.8||-0.8||4.7|
|Mackenzie Cundill World Fund-SI||2.09||74.0||-17.9||-23.9||6.0||-20.9||-10.0||-10.6||-0.8|
|Altamira Global Small Co.||2.50||36.5||-17.2||-22.1||5.6||-14.0||3.0||-3.6||2.6|
|MSCI World ($ Cdn)||-7.9||-3.0||-0.2||-3.1||0.0|
|Russell 2000 ($ Cdn)||-13.3||-2.7||-1.0||-2.4||1.8|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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