| Fund Company | Franklin Templeton Investments Corp. |
| Fund Type | Canadian Small / Mid Cap Equity |
| Rating | $$$$ |
| Style | Bottom up |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Leslie Lundquist since July 1996 Lee Stelmach since May 2009 |
| MER | 2.48% |
| Code | TML 205 – Front End Units TML 305 – DSC Units TML 522 – Low Load Units |
| Minimum Investment | $500 |
Analysis: Formerly known as the Bissett Income Fund, the Bissett Canadian High Dividend Fund focuses on wide range of high yielding Canadian securities including common stock, income trusts, and preferred shares.
The fund is managed using Bissett’s disciplined team approach that is based on a bottom up, growth at a reasonable price philosophy. The team of Leslie Lundquist and Lee Stelmach look for a portfolio of companies that have a history of sustainable growth, and the ability to be able to repeat that growth in the future.
The end result is a fairly concentrated portfolio that holds 46 names, with the top 10 making up slightly more than half of the fund. Like the Canadian market, the fund is also hevily weighted towards Energy and Financial, which combined make up more than 62%.
Unlike other dividend funds, the focus of this fund tends to be more in the small land mid cap space. As of December 31, the fund was nearly 75% invested in small and mid cap stocks, with only a quarter invested in large caps.
Investors receive monthly income distributions which are typically set at $0.055 per month, but may vary, particularly on the quarter end dates, where they can be higher or lower. Based on the most recent 12 month period, the distribution yield paid to investors has been around 5%. Looking at the underlying portfolio, the yield is higher than what is paid out, which indicates that this level of distribution is likely sustainable going forward without a significant erosion in capital.
Despite the conversion from an income trust fund to a high dividend fund, it hasn’t missed a beat. Performance continues to be strong on both an absolute and relative basis. In the past two years, the return has been 15.2%, outpacing the broader market and its peer group.
Our biggest concern about this fund is that with its focus on small and mid cap issuers, the volatility will be higher than a more traditional dividend fund, and other small cap focused income funds including Sentry Small Mid Cap Income and Dynamic Small Business. But for investors with a medium to high risk tolerance who can stomach the higher volatility, this is a good fund for a mix of income and capital gain potential.