| Fund Company | Dynamic Funds |
| Fund Type | Global Equity |
| Rating | $$$$ |
| Style | Bottom up growth |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Noah Blackstein since January 2001 |
| MER | 3.81% |
| Code | DYN 014 – Front End Units DYN 714 – DSC Units DYN 614 – Low Load Units |
| Minimum Investment | $500 |
Analysis: With a beta of 1.23 and a monthly standard deviation that is more than 1.8 times the MSCI World Index, investors in the Dynamic Power Global Growth Class may want to consult a physician before investing, just to make sure their hearts can take the excitement.
Managed by Noah Blackstein using a bottom up growth approach, the portfolio is very concentrated, typically holding between 20 and 30 names. As of February 29, the fund held 25 companies, with the top 10 representing nearly half of the fund. The portfolio is also very concentrated among market sectors, with 40% of the fund in Consumer names, 35% invested in technology, and 23% invested in healthcare.
He uses a quantitative screen which looks to identify companies which are showing strong earnings momentum and have a history of upside earnings surprises. Once these companies are identified, the manager conducts a detailed fundamental review focusing on cash flows, management, and the company’s competitive environment.
Mr. Blackstein employs a very active portfolio management approach. For the past five years, turnover within the fund has averaged more than 320%, which means he has turned over the portfolio more than three times each year. Understandably, this adds to the total cost of owning the fund to the tune of approximately 75 basis points per year. In most cases, he is rapidly trading in and out of his positions, taking gains and buying on the dips.
Like other Power Funds, this is not cheap. The management fee is 2.0%, and there is also a performance fee for this fund, which when included in the total costs, pushes the MER up to 3.81%. While the total costs may be high, the performance has been strong, significantly outperforming the MSCI World Index over the past five and ten year periods.
While we like this fund, it is not for everybody. The level of volatility is extreme and we believe that most investors will be unable to handle it. Further, the key person risk with this fund is enormous. Were anything to happen to Mr. Blackstein, there would be an immediate and noticeable impact to the fund. As a result, we would suggest that this fund is best used by investors with a strong appetite for risk who are looking for a little high octane in their portfolios.