| Fund Company | CI Investments |
| Fund Type | Canadian Equity Balanced Fund |
| Rating | A |
| Style | Mid Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Robert Swanson since December 2012 |
| MER | 2.39% |
| Code | CIG 6803 – Front End Units CIG 6813 – DSC Units |
| Minimum Investment | $500 |
Analysis: In mid December 2012, Boston based Cambridge Advisors took over the management duties of the fund after the resignation of the former managers, Barometer Capital. At the same time, the fund’s name was changed from the Lakeview Disciplined Leadership High Income Fund to the Cambridge High Income Fund.
Under the old managers, it was managed in an active, style agnostic approach that used a top down market and sector risk assessment model to set its tactical asset allocation strategy. It invested primarily in income trusts, high yielding equities and some fixed income investments.
Under the new management team, headed up by veteran manager Bob Swanson, there will be extensive change to the investment process as well as significant portfolio turnover. Typically, Cambridge portfolios tend to be actively managed and benchmark agnostic. They have flexible mandates that allow them to diversify across a wide range of asset classes and geographies. They look for companies that have management that are aligned with shareholders, have a demonstrated history of being strong capital allocators, and have a strong competitive advantage.
Portfolios are managed using a fundamentally driven, bottom up approach. They tend to be broken into to a couple of different buckets; core holdings, which are longer term in nature, and opportunistic holdings, which tend to be short term trading opportunities that are the result of a mispricing in the marketplace.
Because of the material change in the management process, we expect that the risk reward profile of this fund will no doubt change significantly. We can no longer rely on the historic track record of the fund as an indicator of the manager’s process. Looking at other Cambridge managed funds, it is our expectation that the volatility profile of the fund will increase.
It was also stated that the cost of the fund will drop. There are two reasons for this. First, they will no longer be charging a performance fee as they were before. Secondly, the management fee will drop by five basis points to 1.90%.
While we are typically fans of the Cambridge team, we believe that there will be a significant change to the risk reward metrics of the fund and investors may want to find alternatives until we can get a better understanding of what impact those changes will have on the fund.