| Fund Company | AGF Investments Inc. |
| Fund Type | Canadian Small / Mid Cap Equity |
| Rating | $ |
| Style | Growth |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Coulter Wright since February 2008 Bob Farquharson since April 1965 |
| MER | 3.02% |
| Code | AGF 204 – Front End Units AGF 934 – DSC Units |
| Minimum Investment | $500 |
Analysis: What makes this fund interesting is that it invests about two thirds of the fund into large and midsized companies with the remaining third invested in small caps. In selecting investments, the managers use a bottom up investment process that looks for companies with strong long term growth potential. They look for strong management, above average growth potential, financial strength and a reasonable level of valuation. The end result is a very well diversified portfolio holding more than 200 names with the top 10 making up about 25% of the fund.
The managers believe that the current slow growth environment is likely to continue in the near term. They remain positive on energy and materials in general, and are very bullish on gold. It is their premise that central bank actions, in the form of easing measures and the actual buying of bullion will continue to support the gold price. Combined, the resource sectors make up more than half of the fund. It is also currently overweight in technology and underweight in financials. Given the capitalization breakdown of the fund, this is to be expected.
Management is looking to use any market volatility as an opportunity to add attractive names to the portfolio at reasonable levels of valuation.
It is a highly volatile fund and tends to take on more risk than comparable funds. Performance has been largely disappointing, and has lagged both the category and the benchmark of late. No doubt a contributing factor to that is that it carries an MER of 3.02%, which is more than 60 basis points higher than the category average. This high cost will continue to weigh on the performance of the fund.
In reviewing the above, we would be very reluctant to recommend the fund at the moment. It is our opinion that there are more attractive options available that can provide mid cap exposure with less volatility, better returns and lower cost.