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Mutual Fund News

Trimark finds value amid the volatility

swon@globeandmail.com

What are we looking for?

This is our second look this week at what money managers of high-yielding securities are buying for their funds. Today, we look at Trimark Canadian Plus Dividend Class at invesco.ca.

More about the fund

The $75-million fund has been run by Rory Ronan, of Invesco Canada Ltd., since 2007. It gained 7.1 per cent for the year ended Oct. 31 versus an 0.8-per-cent loss for the S&P/TSX Total Return Index. Over three years, the fund has matched the index's annualized return of 11 per cent.

Trimark Canadian Plus Dividend, which typically holds 40 to 45 names, has about 30 per cent weighted toward foreign stocks. "Our focus is on companies that pay a dividend today, but they also have to have excess free cash flow that they can reinvest in the business to help it grow in the future," said the value-oriented manager.

With the recent volatility, he is seeing "a lot of value in the markets in general" except for sectors such as utilities and real estate investment trusts.

What did we find?

Several stocks sitting with double-digit losses this year, including Sun Life Financial Inc., Thomson Reuters Corp. and Brookfield Asset Management Inc.

Mr. Ronan is still a big fan of Thomson Reuters, which sells financial data and legal information and owns the Reuters news agency. He has added to his position as its shares have tumbled this year. The market is focused on the financial business "which has been going sideways" amid the market turmoil, but is overlooking the legal unit that is gaining market share and growing significantly in the emerging markets, he said. "We think the net asset value [of Thomson Reuters] is somewhere in the mid-$30-range."

Progress Energy Resources Corp., a natural gas producer, is also attractive because of its dominant land position in British Columbia's Montney play, he said. Progress Energy this year struck a joint venture with Malaysia-based Petronas to export liquefied natural gas to Asia, where it can fetch higher prices than in North America.

Brookfield Asset Management has a strong base in infrastructure, real estate and renewable energy assets that generate free cash flow to pay out dividends, he said. Management is now in talks with cash-strapped European financial institutions looking to unload infrastructure assets in places such as South America, and those deals could be a potential catalyst for the stock, he added.

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TOP HOLDINGS OF TRIMARK CANADIAN PLUS DIVIDEND CLASS AT OCT. 31, 2011

CompanySymbolPrice $ (Nov. 29)52-wk. high $52-wk. low $YTD price chg. (%)P/E ratioYield (%)Market cap ($ mil.)
Unilever NV*UN-N33.0535.1728.205.25n/a3.798,489
Northland Power Inc.NPI-T16.8017.3414.597.28n/a6.41,306
Progress Energy ResourcesPRQ-T13.9015.6511.009.45n/a2.93,204
Sun Life Financial Inc.SLF-T17.9934.3917.92-40.255.7810,402
Toronto-Dominion BankTD-T69.6386.8268.13-6.2211.93.961,887
Thomson ReutersTRI-T27.0441.6126.46-27.3915.44.722,542
Ensign Energy ServicesESI-T15.6221.5112.253.9311.82.42,386
Husky EnergyHSE-T23.8130.5820.63-10.3210.2522,419
Brookfield Asset Mgt.BAM.A-T27.0933.9525.91-18.46.5216,775
Johnson & Johnson*JNJ-N62.7868.0557.501.512.83.6172,039
*U.S. dollars. Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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