| Fund Company | Brandes Investment Partners |
| Fund Type | Canadian Focused Equity |
| Rating | C |
| Style | Large Cap Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Sionna Investment Managers since Inception |
| MER | 2.65% |
| Code | BIP 181 – Front End Units BIP 281 – DSC Units |
| Minimum Investment | $1,000 |
Analysis: This large cap focused offering is managed by Sionna Investment Managers, a firm that was founded by veteran manager Kim Shannon back in 2002. Sionna operates under the philosophy that over time, human nature will result in investors overestimating and underestimating the true value of stocks. They believe that this mispricing will create strong investment opportunities because stock prices will eventually revert to their intrinsic values over time.
The fund is managed using a team driven, bottom up process that is based on the Graham and Dodd style of value investing where they look to buy stocks that are trading below their estimate of its intrinsic value. Sionna uses their proprietary valuation model which is a mix of quantitative and qualitative analysis to determine a company’s true worth. Quantitative screens are used to narrow the investible universe while qualitative fundamental analysis is used to determine the quality of any investment opportunity. A typical name will have strong balance sheets, predictable earnings and an above average yield. When evaluating a stock, they look for a margin of safety of at least 30% to allow for a level of downside protection.
The resulting portfolio tends to be very well diversified, with the top ten holdings making up approximately 40% of the fund. Individual position weights are typically held to less than 5% and they strive to have a steady mix of 90% Canadian and 10% global equities. Industry sectors are generally well represented. This global exposure is a replication of the Brandes Global Equity Fund, which has likely dragged overall performance of late.
The team is relatively patient in their process with portfolio turnover averaging 34% for the past five years. Interestingly, turnover was significantly higher in 2007 and 2008. The cost of the fund is slightly above the category average, with an MER of 2.65%.
Looking at the historic performance of the fund, it tends to outperform in down and flat markets, but lags in a rising market environment. It has a down capture ratio of approximately 80%, and an up capture ratio of 72%. The volatility is significantly lower than both the index and the category average. Considering all the above, we believe that this is a good fund choice for most investors, particularly for a volatile market environment.