| Fund Company | Phillips, Hager & North Investment Management |
| Fund Type | Canadian Dividend & Income Equity |
| Rating | B |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Warner Sulz since October 2010 |
| MER | 1.18% Series D units, 2.05% Advisor sold units |
| Code | PHN 150 – No Load units
PHN 6150 – Front End Units |
| Minimum Investment | $5,000 |
Analysis: Since Warner Sulz took over the management duties of this fund in 2010, it has become a fairly competitive offering in the Canadian dividend category. As the name suggests, it invests primarily in big, dividend paying Canadian companies.
In managing the fund, Mr. Sulz follows the PH&N philosophy of “quality growth” that looks for strong, well managed companies that offer an attractive dividend yield. Companies must be highly profitable, financially sound, and have a history of strong earnings and dividend growth. It also must be trading at a valuation level that they believe is reasonable. In other words, a high dividend payout is only one part of the selection criteria. It also must be sustainable and have the potential to grow.
With the goal of providing yield, it is not surprising to see it heavily concentrated in financials and energy. Combined, they make up more than two thirds of the fund. The top ten, which makes up more than 40% of the fund, is littered with many of the usual suspects including the big banks, Enbridge, and Suncor. It holds between 60 and 70 names, and portfolio turnover is modest, expected to be in the 20% per year range.
Performance has been decent, with a one year gain to June 30 of 11.8%, handily outpacing the S&P/TSX Composite’s more modest 7.9% gain. Volatility has been higher than the category average for the past five years, but most of that can be attributed to the fund’s nearly 33% drop in 2008. Since the manager change, volatility has been roughly in line with the peer group.
The cost, especially for the Series D units is quite favourable, boasting an MER of 1.18%. The advisor sold units are more costly, coming in at 2.05%, which is just below the category average.
While the fund has been improving of late, it is still not at the top of my list. I believe that there are a number of other more compelling dividend fund options including the Beutel Goodman Canadian Dividend Fund, or the CI Signature Dividend Fund, both of which have outperformed, and done so with less volatility. This is especially true if you cannot access the Series D units as the higher cost eats into the competitiveness of the offering.