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Analysis: Since taking over the management duties of this fund, Daniel Dupont has not skipped a beat. If anything, the relative risk reward profile appears to have improved, with relative volatility dropping while relative return increased. Obviously seven months is too short a period on which to judge, but the signs are definitely encouraging.
Mr. Dupont uses a fundamentally driven, value focused approach, looking for stocks that are trading at a significant discount to his estimate of intrinsic value. The portfolio has also become more concentrated, now holding anywhere between 20 and 50 names, down from 70 or more under the previous manager. As of December 31, the fund held 40 names with the top 10 holdings making up 43% of the fund.
The manager has the option to invest up to 49% of the fund in non Canadian securities. He is taking advantage of that with more than 40% of the fund invested in foreign equities. Given the fund’s value bent, it is not surprising to see that financials make up 24% of the fund, followed by consumer discretionary stocks which make up 15% of the fund.
Performance has been strong, with strong relative and absolute numbers for the past five year period. The volatility of the fund is slightly lower than the S&P/TSX Composite Index and is in line with the category average.
The costs are reasonable, with the front end version boasting an MER of 2.28%, which is 20 basis points lower than the category median. The fund can also be bought in a corporate class structure which will help minimize the potential tax impact of any large distributions for investors in non registered accounts.
This fund has been and continues to be a staple on our Recommended List of Funds. In our opinion, it is a great core holding for investors looking for Canadian focused equity exposure for their portfolios.