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Imaxx equity balanced fund propelled by energy, REITs

What are we looking for?

Stars among Canadian equity balanced fund offerings.

Balanced funds, which invest in stocks and bonds, come in different stripes depending on their equity exposure. (Canadian equity balanced funds must have more than 60 per cent in equities.)

The screen

We ranked the top 15 performers for three years ended May 31. U.S. dollar, segregated, pooled and duplicate versions of the funds were excluded. We also left out funds of funds, and those sold to one professional group.

What did we find?Fifteen-per-cent-plus annual returns in three funds. Imaxx Canadian Fixed Pay led the way with a 15.8-per-cent annualized gain, trailed slightly by Lakeview Disciplined Leadership High Income and GBC Growth and Income.

All funds also benefited from the stock-market rebound from the lows of March, 2009. Norrep Income Growth Class posted an even higher 21.7-per-cent return, but a check under the hood indicates it also had another life as an income trust equity fund during the period.

Imaxx Canadian Fixed Pay, which is 80 per cent invested in dividend-paying stocks and the rest in investment-grade corporate bonds, has 40 Canadian equity holdings. The objective is to generate a dividend yield that is 50 per cent greater than the yield of the S&P/TSX composite, which hovers around 2.8 to 2.9 per cent.

"The running yield of the equity portion of the fund is about 4.4 per cent," said portfolio manager Stephen Carlin, also head of equities at Aegon Capital Management Inc. (He also runs fledgling Canoe Equity Income Class, a clone of the Imaxx fund.)

The three-year performance of the Imaxx fund has been propelled by holdings in midstream or infrastructure energy stocks like AltaGas Ltd., Keyera Corp. and Enbridge Inc., as well as, real estate investment trusts like Calloway REIT, Boardwalk REIT and RioCan REIT.

The fund is now 45 per cent invested in financials, including 25 per cent in banks and 20 per cent in REITs. Another 25 per cent is in energy stocks with a bias to the oil sector.

Mr. Carlin is cautious on the Canadian stock market and only expects a mid single-digit return at best this year because of uncertainty arising from Europe's debt crisis and a faltering U.S. economy. "We think we are stuck in a sub-par economic growth environment - something like 2 per cent or less," he said.



Fund nameMERAssets ($-mil; May 31)3yr % rtn (May 31)5yr% rtn (May 31)2011 % rtn2010 % rtn2009 % rtn2008 % rtnMinimum Investment $
Norrep Income Growth Class-A4.7251.021.7%6.3%2.2%32.6%42.3%-33.6%5,000
imaxx Canadian Fixed Pay2.67223.715.8%5.2%8.4%17.9%35.2%-25.9%1,000
Lakeview Disp Leadership Hi Inc A2.39505.615.6%6.7%6.8%19.2%27.0%-14.3%500
GBC Growth and Income1.6932.915.2%3.0%6.2%17.2%20.9%-25.5%100,000
AGF Monthly High Income2.40610.514.2%2.7%0.3%19.7%46.8%-33.4%500
Bissett Dividend Income-A2.57312.611.4%1.4%5.2%11.6%18.7%-20.0%500
BMO GDN Can Divers Mthly Inc2.45316.210.8%1.9%2.4%12.7%25.5%-22.7%500
Dynamic Diversified Real Asset2.53251.610.2%2.7%-8.0%28.0%38.8%-27.8%500
TD Monthly Income1.485,900.010.1%2.5%3.6%9.8%30.7%-23.4%100
Trimark Diversified Income Class-T82.16408.89.2%0.8%2.8%8.3%24.5%-19.4%500
TD Dividend Income-I2.044,719.79.2%-0.1%1.6%8.9%30.8%-28.8%100
TD Diversified Monthly Income-I2.31552.38.9%0.5%1.6%10.1%27.2%-25.6%100
Brandes Sionna Diversified Income2.2771.08.6%-0.8%-2.1%12.2%27.3%-29.4%1,000
National Bank Monthly Income1.70227.37.3%1.1%-3.7%13.0%29.9%-22.4%500
Renaissance Diversified Income2.5085.97.0%-1.6%-3.6%11.8%21.0%-28.2%500
S&P/TSX Total Return6.4%-1.1%-8.7%17.6%35.1%-33.0%
DEX Universe Bond Total Return Index7.5%6.9%9.7%6.7%5.4%6.4%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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