CI Global Health Sciences Corporate Class

Analysis: Investors often overlook healthcare when building their portfolios. It is one of those sectors that has the potential to deliver strong long term returns, while providing good downside protection in volatile markets.

One of the better offerings in the category is the CI Global Health Sciences Corporate Class Fund, which has been managed by Andrew Waight since June 2000. His management approach is a mix of top down analysis and bottom up security selection. Typically, he will look for broader macro themes within the healthcare sector and then seek out those companies which he feels have the best potential to benefit from them.

When reviewing potential investment candidates, he relies quite heavily on a discounted cash flow model, which helps him determine the company’s intrinsic value. This is further supported by a mix of quantitative and qualitative analysis that includes a review of other valuation metrics including price to earnings ratio and price to book ratio. He will also conduct qualitative reviews that will include face to face meetings with management.

Unlike some other managers in the sector, he tends to be fairly patient. Portfolio turnover has averaged around 30% per year for the most recent five year period, which implies that he holds most names in the fund for about three years. 

While absolute performance has been disappointing of late, the fund’s performance relative to its peer group has been decent, finishing in the upper half of the category.

The cost of the fund is reasonable compared to its peer group, with an MER of 2.44%, which is the lowest in the category.

This fund has long been one of our favourites, however we have been somewhat concerned that the volatility has been trending higher and has been increasing more quickly than the peer group. We will continue to monitor the situation to ensure that it remains in check.