| Fund Company | CI Investments Inc. |
| Fund Type | Canadian Focused Small / Mid Cap Equity |
| Rating | Not Rated |
| Style | Growth |
| Risk Level | Medium High |
| Load Status | Optional |
| Manager | Brandon Snow since September 2012 |
| MER | 2.60% |
| Code | CIG 11108 – Front End Units CIG 1158 – DSC Units |
| Minimum Investment | $500 |
Analysis: Since its September 2012, this Brandon Snow managed small cap offering has handily outpaced both the benchmark and its peer group. For the year ending June 30, it gained a staggering 44%, while the BMO Canadian Small Cap Index was down 1%. While this outperformance is impressive, it is not sustainable, and I expect that over time, we’ll see it return to a more normalized level.
Like all Cambridge funds, it is managed using a fundamentally driven, bottom up approach. Investment opportunities tend to be broken into to a couple of different buckets; core holdings, which are longer term in nature, and opportunistic holdings, which are to be short term trading opportunities that are the result of a mispricing in the marketplace. They look for companies that have management that are aligned with shareholders, have a demonstrated history of being strong capital allocators, and have a strong competitive advantage.
It has a fairly flexible mandate that allows the managers to diversify across a wide range of asset classes and geographies. As a result, it will likely be actively managed and benchmark agnostic. Portfolio turnover since inception has averaged more than 300% a year. The portfolio is also fairly concentrated, holding 36 names with the top ten making up 36% of the fund. Because of this concentration and active approach, I expect that over the long term, this fund will be more volatile than many other small cap offerings.
Currently, the fund is more defensively positioned, holding an overweight in consumer defensives, healthcare and utilities. It is also positioned for modest economic growth, with a significant overweight in both industrial and technology focused names. It has very little exposure to commodity driven names.
I do like the management team and their approach, but I wouldn’t buy this fund based on its recent outperformance, because clearly it is not sustainable going forward. Realistically, I would expect this fund to outpace most of its peers, but to do so with higher levels of volatility. Because of this, I would approach this fund with caution, and I would only suggest you consider it if you have an above average appetite for risk.