| Fund Company | EdgePoint Wealth Management |
| Fund Type | Canadian Equity Balanced |
| Rating | $$$$ |
| Style | Bottom Up Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Tye Bousada since November 2008 Geoff MacDonald since November 2008 |
| MER | 2.14% |
| Code | EDG 188 – Front End Units EDG 388 – Low Load Units |
| Minimum Investment | $15,000 |
Analysis: EdgePoint Wealth Management, an upstart fund company that was founded by former Trimark managers Tye Bousada and Geoff MacDonald, has been met with strong success, garnering more than $2 billion in client assets since their 2008 launch. The EdgePoint Canadian Growth & Income Portfolio is the firm’s Canadian balanced offering has grown to nearly half a billion in assets.
Like all EdgePoint offerings, the fund is managed using an investment philosophy is conceptually very simple – they are long term investors looking to buy an ownership stake in a small number of high quality business at prices that are below their estimate of its true value. For the equity sleeve of the fund, they employ a fundamentally driven, bottom up investment process that is based on the old Trimark approach.
For the fixed income component of the fund, the managers are looking for securities that will provide an attractive total return through coupon payments and capital appreciation while focusing on the issuer’s ability to pay. They can invest in any type of fixed income security, but it is expected that the fund will be heavily weighted towards credits as they have more confidence in their ability to conduct credit analysis on a company or government, rather than trying to predict the direction of interest rates or the shape of the yield curve. They will invest in investment grade or high yield bonds, depending on their relative attractiveness.
The asset mix can vary widely, depending on the relative attractiveness of the various asset classes. For example, the fixed income exposure can range from a low of 25% of the fund to a maximum of 60% of the fund. In setting the asset mix, the managers want to ensure that they are properly concentrated for the risk they accept. With interest rates at near record lows, it makes sense the fixed income exposure is at the low end of this range.
Performance has been strong on both an absolute and relative basis, finishing first or second quartile in each year since its launch. The volatility of the fund has been in line with the category average. The MER of 2.14% for the front end version of this fund, which is well below the category median of 2.33%.
We are initiating coverage of this fund with a $$$$ rating. It is a good core balanced fund for investors who have a medium to high risk tolerance and a long term time horizon