| Fund Company | Scotia Asset Management |
| Fund Type | Tactical Balanced |
| Rating | C |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Larry Lunn since January 2004 |
| MER | 2.07% Investor Series, 2.61% Advisor Series |
| Code | BNS 371 – No Load Units BNS 771 – Front End Units BNS 971 – DSC Units |
| Minimum Investment | $1,000 |
Analysis: Using an active management process, Larry Lunn, of Connor Clark & Lunn Investment Management, sets the asset mix of this fund based on his firm’s expectation of the markets. They can be quite flexible in their allocations, with equities and fixed income being able to range between a low of 20% to a maximum of 80%. The neutral asset mix is set at 35% bonds, 45% Canadian equity and 20% global equity.
Looking at the current positioning, they are currently underweight fixed income, which currently sits at 21%, which is near the lower end of the allowable band. Further, corporate bonds are the focus for their yield advantage, which will help to improve returns while rates remain flat, and will provide better downside protection when rates do move higher.
The portfolio management process is very active, with portfolio turnover averaging more than 200% in the past two years. It is a very diversified fund, holding more than 600 individual names, while the top ten make up just under a quarter.
Performance has been reasonable, more or less in line with the balanced benchmark of 60% Canadian equity and 40% bonds. The overall volatility is in line with the benchmark and the peer group, while the downside protection leaves a bit to be desired. In 2008, it dropped by more than 20%, underperforming the benchmark. It did rebound nicely in 2009 and 2010, earning back those losses and then some.
Considering the above, it is our opinion that this is a fund that will continue to provide investors with benchmark like returns with benchmark like risk. We don’t expect that it will provide any surprises, either to the upside or downside. Still, given the 2.08% MER, we believe that there are better options available for most investors that will provide better risk adjusted returns.