What are we looking for?
How Canadian dividend and income equity funds are faring this year.
These offerings have been attracting attention among yield-hungry investors in a low interest rate environment.
We looked for the eight best and eight worst performers in the category for this year until May 23. U.S. dollar, segregated and duplicate versions of funds were excluded.
What did we find?
A pair of sibling funds in the black, and others struggling in the red.
Because Canadian dividend and income equity funds are mostly invested in equities, they will tend to move with the stock market. However, they will get some returns from dividends or distributions. Some invest in bonds too.
Sentry Canadian Income and Sentry Growth & Income, which are run similarly by lead manager Michael Simpson, led the way, respectively, with 5.6-per-cent and 5.2-per-cent gains. (The latter also invests in smaller companies and those not yet paying a dividend.)
Both also benefited from holdings in real estate investment trusts, some U.S. stocks and takeover activity this year, said Mr. Simpson of Sentry Investments.
The funds owned Astral Media Inc., which was acquired by BCE Inc., and Viterra Inc., which was bought by Glencore International PLC. Sentry Growth & Income also held Provident Energy Ltd., which was taken over by Pembina Pipeline Corp. Names like Alimentation Couche-Tard Inc. and Intact Financial Corp. helped performance too.
Despite the market volatility, Mr. Simpson expects a positive return for the Canadian market by year end. "We have already gone through a correction," said. "We are still seeing decent global demand for commodities, and we'll start to see a bigger impact [on energy stocks] from Iranian oil-supply restrictions on the market." The European Union plans to embargo Iranian oil starting July 1 because of concerns over its nuclear program, while Tehran has cut off oil exports to several European countries in retaliation.
Webb Enhanced Income, which is run by Derek Webb of Webb Asset Management, has had a rough start. The fund, which has a heavy weighting in energy and other resource stocks, lost 9.8 per cent.
LEADERS AND LAGGARDS AMONG CDN. DIVIDEND AND INCOME EQUITY FUNDS THIS YEAR
|Assets||Year-to-date||Calendar year returns||(to April 30, 2012)|
|MER||(in $ mil.)||(to May 23)||2011||2010||2009||2008||1 year||3 years|
|Sentry Canadian Income||2.70||1657.6||5.60%||6.07%||18.56%||32.95%||-22.77%||8.12%||21.46%|
|Sentry Growth & Income||2.76||343.6||5.20%||5.22%||19.51%||26.11%||n/a||9.45%||20.13%|
|Ark StoneCastle Stable Income Class||6.24||n/a||4.36%||-1.89%||n/a||n/a||n/a||5.39%||n/a|
|Renaissance Millennium High Income||2.53||459.8||4.34%||7.63%||16.55%||21.91%||-31.51%||9.07%||18.75%|
|Dynamic Dividend Advantage Class||n/a||28.2||4.20%||n/a||n/a||n/a||n/a||n/a||n/a|
|Fidelity Dividend Plus-A||2.34||211.2||3.50%||2.90%||19.53%||45.67%||-22.24%||-1.48%||22.05%|
|First Asset Cdn Div Opportunity||n/a||160.2||3.40%||11.45%||n/a||n/a||n/a||7.11%||n/a|
|IA Clarington Strat Eq Inc-Y||1.90||222.9||3.17%||-4.53%||9.79%||20.06%||-27.82%||-3.26%||11.18%|
|Webb Enhanced Income||3.66||6.6||-9.75%||-25.14%||19.75%||34.01%||n/a||-28.18%||1.30%|
|Caldwell High Income Equity||2.50||8.0||-6.56%||-2.72%||19.01%||n/a||n/a||-6.44%||6.41%|
|Brickburn Income Growth Class-MF||5.10||4.3||-4.09%||-12.48%||12.26%||13.19%||n/a||-6.66%||4.06%|
|AGF Tactical Income||3.00||250.3||-4.04%||-10.57%||13.98%||28.01%||-29.87%||-13.87%||8.27%|
|Matrix DJ Cda High Div 50 Crp Cl A||2.09||2.3||-3.58%||n/a||n/a||n/a||n/a||n/a||n/a|
|IG Mackenzie Maxxum Dividend Gro-A||2.72||856.4||-3.50%||-8.95%||8.00%||25.67%||-28.49%||-9.32%||7.41%|
|Mackenzie Maxxum Dividend Growth||2.41||643.2||-3.47%||-8.59%||8.32%||26.07%||-28.23%||-8.96%||7.76%|
|Manulife Dividend Fund||2.36||538.4||-3.14%||-6.22%||10.39%||32.34%||-26.95%||-8.20%||10.72%|
|S&P/TSX Total Return||-2.26%||-8.71%||17.61%||35.06%||-33.00%||-9.37%||12.70%|
|Source: Globe Investor, assets are as of April 30|
© 2007 The Globe and Mail. All rights reserved.
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