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Mutual Fund News

Big winners over the past 15 years

swon@globeandmail.com

What are we looking for?

Investment funds with the best 15-year track records.

The screen

We searched for 15 of the top annualized returns for the year ended Dec. 31, 2012. U.S. dollar, segregated and duplicate versions were excluded, as well as those closed to new investors. We included pooled and alternative strategy funds, which are typically sold by offering memorandum, as opposed to a prospectus.

What did we find?

A momentum fund with traction.

STYLUS Momentum, a pooled fund investing in Canadian stocks, led the way with an annualized 16.2-per-cent gain. The fund invests in companies whose stocks have rising price momentum. This often occurs after a company reports earnings that surprise analysts who in turn raise their expectations for the stocks.

"We've had five negative years [during the 15-year timeframe], but if you take any 60-month period of time, there has never been any five-year period where this fund has lost money," said Richard Przybylski, chief investment officer of Toronto-based STYLUS Asset Management Inc.

As founder of CPMS Computerized Portfolio Management Services Inc., which was sold to Morningstar Inc. in 2009, Mr. Przybylski was a pioneer in quantitative investment research in Canada. He has co-run the momentum fund with managers David Fruitman and Matteo Verrilli for the 15 years.

The fund, which requires a $150,000-minimum, has been open to new investors since 2004. While it was a private fund before then, the longer-term record stems from data including audited, prior-year returns net of fees. The fund also charges a performance fee on top of any annual 9-per-cent gain after regular fees. It must also regain the previous year's losses.

The fund, whose investment style has resulted in a bias toward smaller companies, has a high turnover.

Winning stocks last year included names such as Norbord Inc., WestJet Airlines Ltd., Stella-Jones Inc. and TransForce Inc.

One loser was Poseidon Concepts Corp., a maker of storage tanks for liquids used in oil and gas drilling.

Its stock has plunged to penny-stock status from a high of nearly $17 about a year ago after the company took writedowns, reduced guidance and suspended its dividend late last year. "We got out at around $6.30 a share," he recalled. "We call [these kind of stocks] torpedoes, and we don't hang around. If there's bad news, we leave."

© 2007 The Globe and Mail. All rights reserved.

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