| Fund Company | NEI Investments |
| Fund Type | U.S. Equity |
| Rating | $$ |
| Style | Blend |
| Risk Level | Medium High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Richard Fogler since April 2004 |
| MER | 2.64% |
| Code | NWT 132 – Front End Units NWT 233 – DSC Units NWT 333 – Low Load Units |
| Minimum Investment | $500 |
Analysis: Richard Fogler, manager of the fund uses an approach known as Economic Value Added to evaluate potential investments. The objective of the complicated analytical process is to identify companies that consistently add shareholder value, thereby improving the price of their stock. Essentially, Fogler uses this approach to analyze what a company will be worth in the future, and buys stocks in the firms with the best potential. If he doesn’t see the potential for 40% to 50% growth within two years, the stock doesn’t make the buy list.
Unfortunately the results of this approach have been largely disappointing. For the five years ending March 31, the fund lost an average of 4.8% per year, losing more than the benchmark and most of the fund in the category.
The volatility of the fund is high with a beta of 1.26, which means that the fund is significantly more risky than the benchmark. A big reason for this higher volatility is that the fund is very concentrated. It holds less than 30 stocks and the top ten holdings make up nearly three quarters of the fund.
The fund is significantly overweight in financials and holds a low relative weighting in energy and materials. The manager has been moving more towards dividend paying companies in the past several months.
Despite being one of the better performing funds in the month of March, we feel that there are better options available in the U.S. equity category. We are initiating coverage of this fund with a $$ rating.