| Fund Company | Mackenzie Financial Corporation |
| Fund Type | Canadian Equity Balanced |
| Rating | $$$ |
| Style | Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Lawrence Chin since April 2009 David Slater since April 2009 |
| MER | 2.49% |
| Code | MFC 740 – Front End Units MFC 840 – DSC Units |
| Minimum Investment | $500 |
Analysis: This fund is managed using the same deep value style that has become synonymous with Cundill. The approach is almost contrarian, buying stocks when they are most hated by the markets. Over the long term, this has provided strong returns for investors with modest levels of risk. However, during shorter periods of time, it has the potential to experience higher levels of volatility which can lead to periods of underperformance.
Like other Cundill funds, this one is very concentrated, holding less than 30 equity names and less than 30 fixed income investments. The top ten holdings make up 45% of the fund. In constructing the portfolio, the managers use a bottom up approach that looks to invest when the security is trading at a significant discount to their estimate of its intrinsic value.
The managers will actively manage the asset mix of the fund, but it does have a neutral mix of 60% equities and 40% fixed income. As of July 31, the fund was roughly 65% equity and 35% bonds.
The fixed income portion of the fund can invest in government bonds, corporate bonds and high yield bonds. They will focus the portfolio on the sectors that are offering the most attractive risk reward characteristic. Currently, they are conservatively positioned, holding short duration bonds to protect against rising rates. They believe that long term rates offer very little incentive to take on the additional duration risk.
Within the equity side of the fund, a bottom up, deep value, contrarian stock selection process is used. Like with other Cundill funds, they are not afraid to hold significant cash balances if no suitable investment opportunities are found.
While the longer term performance has been strong, volatility has been high compared to other funds in the category. In fact, the volatility is comparable to a well managed Canadian dividend fund. This higher volatility can come from two main sources; the manager’s deep value style, and their high conviction, concentrated portfolios.
Any investor considering this fund should have a long term time horizon and at least a medium risk tolerance. While we like the fund, we believe that there are better options available for most investors.