| Fund Company | BMO Guardian Funds |
| Fund Type | Canadian Dividend & Equity Income |
| Rating | $$$ – Mutual Fund Update B – Paterson |
| Style | Blend – Mid Cap |
| Risk Level | Medium |
| Load Status | Optional front or back load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | John Priestman – since inception (October 2002) Kevin Hall – since inception (October 2002) Michelle Robitaille – since June 2003 Ted Macklin – since July 2008 |
| MER | 2.40% |
| Code | GGF 619 |
| Minimum Investment | $500 |
Analysis: This Canadian Dividend and Equity Income fund used to be an Income Trust focused fund. Many income trusts were forced to convert back to corporations which resulted in the focus of this fund also shifting. The fund now invests predominantly in high yielding equities and real estate investment trusts (REITs).
The fund is managed by a team led by John Priestman, one of the most highly regarded managers in the former income trust space. Shortly after the announcement regarding the implementation of trust taxation, the management team welcomed large cap equity expert Ted Macklin into the fold in 2008. Since Ted’s arrival, the fund has begun adding larger cap holdings into the funds such as TD Bank and TELUS. While there may be some more traditional dividend stocks in the fund, the managers have said that they don’t intend to become just another dividend fund. They intend to deliver high income yields to investors by investing in a wide range of income producing equity securities including common stock and REITs.
The portfolio is fairly well diversified holding between 40 and 50 names with the top 10 holdings making up approximately 45% of the fund. Performance has been strong, outpacing the S&P/TSX Composite Index in addition to posting first quartile performance. The fund pays a monthly distribution of $0.06 per unit per month, which works out to be a yield of approximately 5.5% at current prices. Given yield on the underlying investments in the portfolio, combined with the longer term return profile of the fund, it is likely that this level of distribution appears to be sustainable for the near to medium term. The volatility of the fund is reasonable, and roughly in line with the broader market.
The fund is a bit expensive relative to other Canadian Dividend & Equity Income Funds. The MER of the fund is 2.35%, while the median MER of other funds in the category is 2.19%.