| Fund Company | Desjardins Investments Inc. |
| Fund Type | Canadian Neutral Balanced |
| Rating | $ |
| Style | Fixed Income – Top Down
Equities – GARP |
| Risk Level | Medium |
| Load Status | No Load |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Fiera Sceptre since March 2011 |
| MER | 2.14% |
| Code | DJT 00007 |
| Minimum Investment | $1,000 |
Analysis: Anyway you look at this fund, it has been a disappointment. Performance has lagged both the index and the majority of its peer group in virtually all time periods. As of August 31, the fund’s ten year return has been 3.75% while a benchmark of 60% Canadian equities and 40% Canadian bonds would have earned 7.89%.
Fiera Sceptre Inc. was hired to take over the management duties of the fund in March of 2011. While many had hoped that this would be the catalyst to turn things around, there has been little evidence of that so far. Since taking over, the fund has dropped by more than 5%, while the index has lost 2.3%.
For the fixed income sleeve, it is managed using a top down approach to set the fund’s target duration. The focus is on higher quality bonds and can only invest in bonds that are rated BBB or higher. For equities, stocks are selected using a Growth at a Reasonable Price approach that looks for companies that have above average potential for revenue growth in their respective sectors.
The manager is expecting an environment of modest economic growth which favours equities. As a result, the asset mix is tilted towards equity, holding 57% in stocks, 37% in bonds and 15% in cash as of August 31. The manager can also invest up to 35% of the fund outside of Canada. Currently, just under a quarter of the fund is global. The manager is very active, with a portfolio turnover rate that has averaged more than 170% for the most recent five year period.
If there is a bright spot, it is that the MER is 2.14%, which is modestly below the category average.
Quite frankly, we believe that there are much better balanced funds available.