| Fund Company | Mackenzie Financial Corporation |
| Fund Type | Global Equity |
| Rating | $$$$ |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Paul Musson since January 2001 David Arpin since January 2009 |
| MER | 2.52% |
| Code | MFC 081 – Front End Units MFC 611 – DSC Units |
| Minimum Investment | $500 |
Analysis:This is an update to our report on the Ivy Foreign Equity Fund that was originally published in December. You can read the report at https://paterson-associates.com/?p=420
With market volatility expected to remain high for the next few quarters, risk adverse investors may want to consider adding some of the Ivy Foreign Equity Fund into their portfolios as a core global equity holding. Capital preservation is hallmark with this fund as it looks to provide long-term growth through investing in a concentrated portfolio of high quality companies.
Management has done a very good job at preserving capital. For example, last year the fund managed to gain 3.2% while the index was down 5.7%. This is consistent with the manager’s approach. In 2008 when the index was down nearly 30%, the fund was down by 6.7%. During the tech collapse in 2002, the market was down 19.4% while the fund was down 2.2%. The fund also does a good job at keeping volatility in check. Its volatility is significantly lower than both the index and its peer group.
Returns, particularly the longer-term numbers have been strong. For the five years ending May 31, the fund has gained an average of 1.3% per year while the Dow Jones Global Index has lost 4.0% per year.
To achieve this, the managers run the portfolio using a very simple and basic philosophy. The have a concentrated portfolio of 20 to 30 profitable large cap companies with strong balance sheets and excellent management teams that are trading at reasonable valuations. The managers take a long term and very patient view. As a result, portfolio turnover tends to be relatively low.
The fund is very defensively positioned. As of May 31, the fund was very heavily overweight in consumer staples and consumer discretionary, which combined make up more than half of the fund. Currency is not hedged, which will hurt the fund when the Canadian dollar is appreciating, but will boost performance when the Canadian dollar is declining.
The biggest knock on this fund is that it will very likely underperform during a significant market run up. Given our expectation for continued volatility, this is a fund that will serve most investors well until things settle down. Within the context of a portfolio, it is our opinion that this fund is a great core global equity holding for most investors. Those with a higher risk tolerance may want to look at a more aggressive global fund for the better upside participation when markets do rally higher.