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Dividend stocks boost Matrix balanced fund

swon@globeandmail.com

What are we looking for?

Stars and dogs among global balanced equity funds over the past three years.

These funds, which can go anywhere and invest in both stocks and bonds, continue to be popular in a volatile stock market environment.

The screen

We ranked the eight best- and the worst-performing funds in this group for three years ending Aug. 31. (The funds must have more than 60 per cent invested in stocks.) U.S. dollar, segregated and duplicate versions of the funds were excluded, as well as funds closed to new investors.

What did we find?

A global balanced fund stuffed with dividend-paying equities.

Matrix Tax Deferred Income led the pack with an annualized gain of 9.5 per cent, and managed to do so despite charging a higher-than-average fee. Cassels Investment Management Inc., which runs the equity side, has hired Brookfield Asset Management to oversee the bond portion.

"We buy companies that have a history of dividend increases and prospects for dividend increases going forward," said Liis Palmer, a portfolio manager with Cassels Investment Management. "They are good businesses with a competitive advantage or brand strength."

Over three years, some of the fund's gainers included liquor giant Diageo PLC and international tobacco company Philip Morris International Inc. Smaller high-yielding securities like Alaris Royalty Corp., which provides financing to private companies, and Westshore Terminals Investment Corp. also helped performance. "Westshore is yielding almost a 5-per-cent dividend," she said.

On the equity side, Canada is the biggest country weighting. Domestic stocks include energy names like Bonavista Energy Corp., Arc Resources Ltd. and Keyera Corp. that have "good distributions," Ms. Palmer added.

The macro-economic backdrop suggests a sluggish, but improving U.S. economy, slower growth in Asia and an uncertain resolution for the euro-zone debt crisis, she said. With that in mind, "we want to make sure that the investments are as bullet-proof as possible."

*****

THREE-YEAR STARS AND DOGS AMONG GLOBAL EQUITY BALANCED FUNDS

Assetsto Aug. 31/12Calendar year returns
FundMER(in $ mil.)3 years5 yearsYTD2011201020092008
Leaders
Matrix Tax Deferred Income A3.4014.39.51%-0.74%3.20%5.38%12.61%25.38%-34.83%
Mawer Tax Effective Balanced1.00135.47.39%3.10%5.39%2.13%10.15%17.58%-17.04%
Mackenzie Sentinel Divers Inc-A2.2942.47.34%4.65%-0.20%10.89%26.07%
BMO GDN Growth Solution-Mutual2.605.47.03%0.61%5.08%1.79%9.48%12.32%-20.83%
Trimark Global Balanced2.63428.96.95%-1.30%5.81%1.51%8.34%6.56%-19.27%
Compass Balanced Growth Portfolio1.93495.66.95%1.22%6.06%-1.53%11.04%19.23%-21.21%
BMO GDN Global Diversified-Mutual2.5044.36.73%1.68%2.06%-4.59%15.94%20.73%-19.64%
Fidelity Global Growth Portfolio-A2.4725.56.42%-0.56%6.62%-5.86%12.19%25.60%-31.27%
Laggards
Excel Income and Growth2.983.4-6.89%-7.30%-14.79%-18.45%11.24%4.51%-14.62%
Investors Global Dividend-A2.73846.1-2.31%-6.34%1.60%-6.30%-3.08%8.50%-24.94%
Caldwell Balanced2.7529.70.36%-2.82%-3.11%-3.68%2.02%17.46%-30.24%
Brandes Global Balanced2.4545.40.79%-4.79%1.89%-1.57%2.42%3.70%-21.44%
Mackenzie Cundill Glo Bal. 'C'2.47323.91.16%-3.13%8.31%-17.50%8.62%28.59%-30.02%
Alto Moderate Portfolio-A2.64723.71.31%-0.50%1.75%-8.20%6.71%20.76%-18.35%
Axiom Foreign Growth Portfolio2.745.01.38%-3.93%1.81%-6.41%6.93%9.84%-23.92%
Investors Growth Plus Portfolio-A2.62399.91.42%-0.65%2.40%-4.73%4.07%13.74%-16.23%
MSCI World ($ Cdn)4.73%-2.55%7.14%-2.88%6.76%11.78%-26.05%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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