| Fund Company | Mackenzie Financial Corporation |
| Fund Type | Canadian Focused Equity |
| Rating | C |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Paul Musson since January 2009 Matt Moody since July 2012 |
| MER | 2.50% |
| Code | MFC 083 – Front End Units MFC 614 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like all Ivy branded funds, the focus of this one is on capital preservation. To do this, it invests in only in high quality, large cap companies. To build the portfolio, the mangers use a fundamentally driven, bottom up process with no fixed sector allocations, allowing them significant freedom to build a concentrated and very conservative portfolio. The top ten holdings make up 45% of the fund.
With its focus on capital preservation, it is not surprising to see the fund heavily weighted in the more defensive financial and consumer focused sectors. Financials make up 24%, while the consumer focused holdings represent 44%. It is underweight in both energy and materials which is not surprising, given the lack of earnings visibility with most companies in those sectors. The focus is on Canada, where 60% of its companies trade, followed by the U.S. which makes up 24% of the portfolio with the balance in Europe.
The longer term performance has been less than stellar, with an annualized ten year return of just 3.6%, compared with a 9.5% gain for the S&P/TSX Composite Index during the same period. But where this fund really earns its stripes are in periods of extreme market volatility. For example, in 2008, the market was down 33%, yet this fund was down by less than half of that. In 2011, the market fell by 8.7%, yet this fund was up 1.5%.
It offers one of the lowest downside capture ratios of any Canadian equity fund available today. Unfortunately the downside to this is that it also offers one of the lowest upside capture ratios. When markets are moving sharply higher, this fund tends to leave a lot of money on the table. For example in 2009 the market shot higher by 35%, yet this fund gained only 4.9%.
This is a great fund to own in highly volatile time and when you expect that markets will fall. However, looking at the current environment, while we expect some elevated volatility, it is certainly not high enough to warrant this fund for most investors. But this fund may be a good way for very conservative investors looking for a relatively low risk way to dip their toes into the equity markets. Those with average or higher risk tolerances are likely to want to look elsewhere.