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Analysis: Peter Frost took over the lead manager duties in April of 2010. Mr. Frost is responsible for setting the tactical asset allocation mix of the fund and managing the equity portion of the fund. Tristan Sones and Tom Nakamura are responsible for the fixed income portion.
The fund has a neutral weighting of 50% equities and 50% fixed income. The manager has a very flexible mandate and will set the asset mix based on the relative income opportunities and the risk/reward characteristics of each asset class. Equities are permitted to range between 20% and 80% of the fund’s assets.
Peter Frost employs a bottom up approach that uses both qualitative and quantitative factors to identify companies that have shown sustainable dividends, strong balance sheets, stable earnings and cash flows and a strong management team.
On the fixed income side of the fund, the managers use a top down approach to determine the appropriate duration strategy. The team looks for bonds that provide an attractive yield relative to the risk. The fund has the ability to invest in non investment grade credits.
Performance has been strong, handily outpacing its peer group with first quartile performance in all time frames, except for 2008 when the fund dramatically underperformed. The volatility is on par with an equity fund. While it is considered a balanced fund, investors should think of this more as a hybrid equity fund, given the risk characteristics.
The fund pays out a variable distribution, averaging 6.2 cents per unit, which at current prices is an approximate yield of 7% per year.