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During the first quarter, there were a number of changes to the Recommended List.
The changes which occurred are:
AGF Canadian Small Cap Fund – We removed the AGF Canadian Small Cap Fund from our Recommend List during the quarter. We added the fund to our Recommended List in December 2009 and we were rewarded with strong performance in 2010. The fund held up relatively well against the index in 2011, however, we have been very concerned regarding the risk adjusted performance of the fund for the past few quarters. We had been noticing a steady erosion in the risk reward profile of the fund. As a result of our recent review of the fund, we have decided to remove the fund from the list.
Trimark Fund – During the quarter we placed the Trimark Fund UNDER REVIEW. The lead manager of the fund, Dana Love resigned from the firm. He is being replaced by the team of Michael Hatcher, Darren McKiernan and Jeff Feng. This team has worked together for more than nine years, first at Burgundy Asset Management, and more recently at Invesco. They made the move to Invesco in 2009. Each of the team members manages other products for Invesco and they have all posted very strong absolute and relative returns with their individual funds. There is not expected to be any change to the investment process that is used in the management of the fund. However, there has already been significant turnover within the portfolio since they took the reins. As things settle down, portfolio turnover is expected to be in the 20% range. After meeting with the team, we are fairly comfortable with their approach. However, given the significant turnover which has occurred in the fund, we would like to see how it performs over the next few quarters to get a sense of the risk/reward profile.
AGF Emerging Markets Fund – We placed the AGF Emerging Markets Fund UNDER REVIEW during the quarter. It was recently announced that longtime manager Patricia Perez-Coutts and two of her team members were resigning from AGF. They are being replaced by Stephen Way, a manager who has been with AGF for more than a quarter century. Mr. Way is a very capable manager and has been doing a good job on the funds which he currently manages. He is also very familiar with the investment style and process that is used by the members of the AGF management team. In fact, Mr. Way was instrumental in the development of the process. Joining Mr. Way on the fund will be Alpha Ba, who will be co-manager on the fund. We had the opportunity to participate in a conference call with the new management team and we were encouraged by what we heard. Our biggest concern is that Mr. Way, while being a strong manager has not been responsible for the management of a dedicated emerging markets portfolio. Because of that, we will be placing the fund UNDER REVIEW and will monitor the transition closely.