| Fund Company | CI Investments Inc. |
| Fund Type | Canadian Dividend and Income Equity |
| Rating | B |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Eric Bushell since October 1999 John Hadwen since October 1999 John Shaw since October 1999 |
| MER | 1.88% |
| Code | CIG 610 – Front End Units CIG 810 – DSC Units |
| Minimum Investment | $500 |
Analysis: With its flexible mandate, investing in a mix of preferred shares and high yielding common shares, it offers investors access to a well diversified, quality portfolio. It is invested mainly in the bigger names including TD Bank, CIBC, and BCE. While the focus is Canada, it can invest anywhere in the world, and as of February 28 held 42% outside of Canada.
It is very well diversified, holding nearly 200 individual positions, with the top ten making up just over 21% of the fund. Being a dividend focused mandate, financials, including real estate, are the biggest component of the fund. Telecom is also prevalent because of its yield profile, offering decent payouts and modest growth potential.
It is managed using a team approach that is based on very intensive, bottom up process that analyses the entire capital structure of a company. This allows the team to find the most attractive areas across all potential investment opportunities within a company.
The managers are reasonably patient in their approach, with portfolio turnover averaging just over 50% in each of the past five years.
Returns, particularly on a risk adjusted basis have been strong. For the five years ending February 28, it posted an annualized compound return of 5.5%, handily outpacing the 1.8% gain in the S&P/TSX Composite Index over the same period. Making this even more attractive is that the level of volatility has been markedly lower than both the index and the category average.
Not surprisingly, this volatility profile has resulted in strong downside protection. In 2008 it was down 23% compared with 33% for the index, while in 2011, it lost 0.9% while the index dropped by nearly 9%. A drawback is that it tends to underperform in sharply rising markets, lagging both the index and peer group in 2009 and 2010.
It pays a monthly distribution of $0.04 per unit, which works out to an annualized yield of approximately 3.7%. Looking at the yield of the underlying portfolio, this appears to be sustainable at the moment.
Considering the above, combined with its very reasonable 1.88% MER, it is our opinion that this fund could be a very strong core offering for most investors. It offers a high quality management team and a disciplined process that we believe will allow for strong risk adjusted returns over the long term.