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In search of stability in volatile markets

What are we looking for?

The best-performing balanced funds in the past five years - a time period that covers the recession.

These funds invest in both stocks and bonds, and they continue to be investor favourites for stability in volatile markets. While bond and equity funds were both suffering net redemptions of $459-million and $128-million respectively again in June, balanced funds' net sales totalled $2.5-billion, according to data from the Investment Funds Institute of Canada.

The screen

We searched for the 15 top performers among all Canadian, global and tactical balanced funds for the five years ended June 30. U.S. dollar, segregated, pooled and duplicate versions were excluded.

What did we find?

Only two funds posted annualized returns higher than 7 per cent in the period, which takes into account the recession.

The Black Creek Global Balanced Fund was the top performer with gains of 7.45 per cent.

Black Creek portfolio manager Richard Jenkins takes a long-term approach to investing and looks at companies that are market share leaders. But he's not totally in the value camp, since the businesses he invests in also need to have room to grow over a 10-year period.

"You have to be winning on the ground and taking market share. For me, that's a sign a company is better than its competition," said Mr. Jenkins. "I want quality that's growing, but I don't want to overpay for it."

The Black Creek fund is composed of investments from around the world including Mexican television and media company Grupo Televisa SAB, which provides much of the content for the the most-watched TV channel in the United States: Univision.

Austria-based Wienerberger AG is another favourite of Mr. Jenkins because it is the largest brick producer in the world, and is well positioned to take advantage of construction booms in Europe and the U.S. as those economies recover.

The Black Creek fund has only 11.5 per cent of assets invested in Canada and Mr. Jenkins is now selling down U.S. investments, which are getting more expensive as investors pile in. The fund's European and Japanese positions have been going up.

In terms of fixed income, the Black Creek fund invests primarily in corporate bonds at the moment through its parent fund company CI Investments Inc., but Mr. Jenkins said different economic cycles change that mix, and he could see adding more cash to that mix.



Fund5-yr % rtn (Jun.30)1-yr % rtn (Jun.30)3-yr % rtn (Jun.30)10-yr % rtn (Jun.30)2012 % rtn2011 % rtn2010 % rtn2009 % rtn2008 % rtnMERAssets ($-mil)Category
Black Creek Global Balanced A7.522.410.1-21.9-9.48.817.6-11.22.59195.7Global Equity Balancd
Steadyhand Income7.22.96.7- Fixd Incm Balncd
Mackenzie Cundill Cdn Balanced 'C'6.916.79.65.917.9-8.213.820.7-17.62.481,352.2Global Neutrl Balancd
Trimark Diversified Yield Class-PT66.815.011.4- Equity Balancd
Trimark Diversified Income Class-T86.815. Equity Balancd
Middlefield Income Plus Corp Cl-A6. Equity Balancd
CI Signature High Incme6.48.310.,056.9Global Neutrl Balancd
Cambridge High Incme Fund-A6.37.710.2-6.26.819.227.0-14.32.38376.4Cdn Equity Balancd
Mawer Tax Effective Balancd6.214.711.17.311. Equity Balancd
Templeton Global Balancd-T6.116.29.4-12.5- Neutrl Balancd
Mackenzie Ivy Global Balancd6. Equity Balancd
Bissett Dividend Incme-A5. Equity Balancd
AGF Monthly High Incme5.64.87.2-5.60.319.746.8-33.42.39833.7Cdn Equity Balancd
Lincluden Balancd-O5.514.57.76.710.7-3.58.616.6-9.71.9939.1Global Neutrl Balancd
Desjardins Quebec Balancd5.310. Neutral Balanced
S&P 500 Composite Totl Rtrn Idx($Cdn)7.724.618.14.613.
S&P/TSX Total Return-
MSCI North America Index ($ Cdn)7.023.517.14.913.
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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