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During the quarter there were no additions or deletions to our Recommended List.
Notes:
Mackenzie Ivy Foreign Equity Fund – It was announced that during the quarter, David Arpin, one of the co-managers of the Mackenzie Ivy Foreign Equity Fund had left the firm. Mr. Arpin was largely responsible for the U.S. equity names in the Ivy Funds. While this is a significant departure, we will be maintaining the fund’s rating rather than placing it UNDER REVIEW. The Ivy team is made up of six individuals. Paul Musson is responsible for making all investment decisions for the fund, with the other members contributing ideas based on their areas of expertise and specialization. Ivy funds tend to be quite concentrated, with the Ivy Foreign Equity Fund holding 30 names. Their investment style is also quite patient, with low levels of portfolio turnover. For the most recent five year period, turnover has averaged below 20%. Given this style, the loss of a team member should not, in our opinion, result in a meaningful deterioration in the risk reward characteristics of the fund. Regardless, we are closely monitoring the fund and will stay on top of any such deterioration.
Sprott Canadian Equity Fund – Last quarter, we placed the Sprott Canadian Equity Fund UNDER REVIEW because its relative performance had been declining, while its volatility, both on an absolute and relative basis has been increasing. The key reason for this is that the company is heavily invested in gold companies which had failed to keep pace with gold bullion and the broader equity markets, while being extremely volatile. Gold equities outperformed significantly during the quarter, however the sustainability of this outperformance and the continued high levels of volatility remain a concern. As a result, we are keeping the fund UNDER REVIEW for at least the next quarter. This is a fund that is only suitable to those with an above average appetite for risk
AGF Emerging Markets Fund – In the first quarter we placed the AGF Emerging Markets Fund UNDER REVIEW after manager Patricia Perez-Coutts left the firm. While we have been encouraged by the performance and volatility of the fund since her departure, there has not been sufficient time to gain a level of comfort with the new management team. Therefore we continue to monitor the situation closely
CI Signature Canadian Balanced Fund – We have reinstated our rating on the CI Signature Canadian Balanced Fund. The risk reward metrics of the fund have settled down and are now back to a point where we are comfortable with the fund and its management team. As a result, we are removing the UNDER REVIEW rating effective immediately.