| Fund Company | Mackenzie Financial Corporation |
| Fund Type | U.S. Equity |
| Rating | B |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Gustaf Zinn since July 2006 Erick Becker since July 2006 |
| MER | 2.58% |
| Code | MFC 1022 – Front End Units MGC 1172 – DSC Units |
| Minimum Investment | $500 |
Analysis: Recently added to our Recommended List of funds, this U.S. equity fund is a good core holding for many investors. In selecting stocks for the portfolio, the managers use a two pronged approach. One approach is a company specific approach. Here, they look for opportunities that are specific to a particular company. Examples would include a company that is going through a restructuring, changes in management, or a reallocation of capital. The other approach that is used is a more thematically driven one, that looks at the world from a top down perspective, looking to identify market sectors that can benefit from the company environment.
Regardless of which investment approach brings a particular investment idea to their attention, they look for companies that have strong competitive advantages that are experiencing a positive growth environment. The result is a concentrated portfolio of between 40 and 50 names. Typically, the top ten holdings will make up about 30% of the fund. The investment process is fairly active, with portfolio turnover averaging around 100% for the past five years.
Recently, the managers have been increasing the exposure to cyclicals in the fund. They believe that the U.S. is on a path to return to sustainable economic growth. Another concern is that many of the more defensive names have experienced big run-up’s and they don’t want to chase the valuation levels. Another theme they are playing is one of energy self sufficiency for the U.S. They cite that domestic oil production is at 20 year highs, and this trend will benefit many U.S. based companies.
Performance, particularly the long term numbers, have been strong. Since 2008, it has finished in the top quartile, except for 2009. Volatility has been roughly in line with the index, but the recent increase in cyclical exposure may push that higher.
Still, it is my opinion that this is a pretty solid option for investors looking for actively managed U.S. equity exposure. I expect that its performance will be comparable to the broader index, but with better downside protection. The costs are a touch on the high side at 2.58%, but I do believe that fund will compensate investors for the extra cost over the long term.