| Fund Company | Manulife Mutual Funds |
| Fund Type | Global Equity |
| Rating | $$$ |
| Style | Bottom Up Value – All Cap |
| Risk Level | High |
| Load Status | Optional front, back end or low load |
| RRSP/RRIF Suitability | Average |
| TFSA Suitability | Poor |
| Manager | Christopher Arbuthnot since Inception |
| MER | 2.80% |
| Code | MMF 8522 – Front End |
| Minimum Investment | $500 |
Analysis: This is an all cap global equity fund that has been managed by Christopher Arbuthnot since the fund’s April 2007 launch date. The manager is not bound by any market cap, sector or geographic constraints, so he is able to truly to embrace a “go anywhere” philosophy. In selecting stocks for the fund, the manager uses a value focused approach, looking to pay a reasonable price for a stock, relative to its growth expectations. The manager looks for good businesses with strong management, efficient use of capital and a history of product innovation. The managers will also look for turnaround situations such as a new management team in place, new products being brought to the market or industry consolidation.
The portfolio is heavily concentrated in Energy, Consumer Discretionary and Industrials, which combined make up more than 61% of the total portfolio. Geographically, the portfolio holds a quarter of the fund in the U.S., 19% in Brazil and nearly 13% in Canada. The Fund is fairly concentrated with the top 10 holdings making up 46% of the fund.
Performance in the past year have been disappointing, with the fund losing nearly 25% while the MSCI World Index gained 1.3%. Looking at the most recent three years, the fund has delivered an annual compound return of 17% per year, compared to the index, which has returned 6%. This fund is highly volatile and has tended to gain more than the index in a rising market, but has also shown losses which are greater than the index in falling markets. This is attributable to the fund’s concentrated positioning and its higher exposure to small and mid cap stocks. This is not a cheap fund with an MER of 2.80%.
While this may be a good fund to hold in a rising market, we do not feel that it is a good fund for all investors, and certainly do not envision it being used as a core holding for most investors. It is our opinion that given the higher levels of volatility, active management style, and all cap nature of the fund that it is best used as a complimentary fund in a well diversified portfolio. The Fund is also fairly highly correlated to the major equity indices, so it would play the role of a return enhancer, rather than bringing much in the way of risk diversification benefits.