| Fund Company | Phillips, Hager & North Investment Management |
| Fund Type | Canadian Equity Balanced |
| Rating | C |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Terry Bacinello since June 2006 |
| MER | 1.33% |
| Code | PHN 800 – No Load Units PHN 6800 – Front End Units PHN 4800 – Low Load Units |
| Minimum Investment | $5,000 |
Analysis: With a name like BonaVista Global Balanced, one would expect a fund with a go anywhere mandate that is well diversified around the globe. Unfortunately, one would be wrong. This is really a Canadian focused balanced fund with a neutral asset mix of 45% Canadian bonds, 35% Canadian equity and 20% global equity. Currently, the fund is overweight equities, with a 30% weighting to Canadian bonds, 40% Canadian Equity and 25% global equity, with a 5% cash weighting. Based on the manager’s current outlook, they expect that an overweight position in equities will be maintained for the near to medium term.
They use a value driven philosophy for both the equity and fixed income portions of the fund. They believe that superior long term investment returns are the result of buying high quality securities at attractive prices, and having the patience to wait until the value is recognized by the market. Asset mix is actively monitored based on expectations and any changes to the asset mix are typically made in a fairly gradually manner.
The fund’s fixed income exposure looks very similar to the DEX Universe in terms of asset mix, credit quality duration and yield. It is conservatively managed and is designed to help reduce the risk of the overall portfolio.
The equity sleeve is managed using a fundamentally driven, bottom up, relative value style. Fundamental analysis helps them determine the company’s internal growth rate, which is a key factor in determining its intrinsic value. Once they have this estimate, they can compare the value of the company relative to the market and its peers.
They tend to favour companies that are in a strong leadership position or have a sustainable competitive advantage, a demonstrated history of profitability, and are in a very sound financial position. In addition, there must also be opportunities for continued growth and a strong management team in place. .
The portfolio is well diversified, holding more than 160 positions, with the top ten making up just under a quarter of the fund.
Shorter term performance has been strong, gaining 8.1% for the year ending February 28, handily outpacing the benchmark. This can be attributed to the higher equity holdings, and particularly the exposure to global equities, which have been strong of late. Longer term numbers are in pretty much in line with the benchmark. Volatility has been in line with category average.
Considering the above, it is our opinion that this is a solid, but unremarkable fund. It is unlikely to surprise you either on the upside or the downside. If you buy it direct from PH&N, it is a good deal, particularly with the MER coming in at a very low 1.33%. If you must buy the other series, the MER is much higher at 2.46%, which erodes the attractiveness of the fund considerably.