| Fund Company | Dynamic Funds |
| Fund Type | U.S. Equity |
| Rating | F |
| Style | Value |
| Risk Level | Medium |
| Load Status | Optional |
| Manager | David Fingold since September 2005 |
| MER | 2.48% |
| Code | DYN 041 – Front End Units DYN 741 – DSC Units |
| Minimum Investment | $500 |
Analysis: One of my core beliefs about investing is that if you can minimize the risk, the return will take care of itself. This David Fingold managed fund is one of the best out there at managing the downside risk of the markets. When I look at its downside capture ratio, which measures how the fund has performed compared with its benchmark in falling markets, it has consistently been one of the best funds in down markets. The unfortunate drawback is that of late, this defensive positioning has also dragged the upside performance, resulting in chronic underperformance.
In the past twelve months, the fund has underperformed the S&P 500 nine times. In the past three years, it has underperformed two thirds of the time. For the three years ending September 30, the fund has gained an annualized 6.35%, while the S&P 500 has gained more than 16%.
While I haven’t spoken with the manager recently, everything I have seen from him seems to indicate that they are doing the right things, at least on paper. He continues to use a fundamentally driven, bottom up value focused approach to securities selection, buying stocks trading at a significant discount to their intrinsic value and selling when they become fully priced. The portfolio is quite concentrated, typically holding about 30 names and he places large bets on stocks he likes. As of September 30, the top 10 holdings made up nearly 45% of the fund.
Coming out of the financial crisis, this was one of my favourite U.S. equity funds. It held up remarkably well during periods of volatility, and had shown decent overall performance. Unfortunately things seem to have come off the rails of late.
David Fingold has done a good job with the other funds he manages however this offering has continued to lag. While I believe that the performance will eventually improve, I can’t say when. There are definitely better options in the U.S. equity category that will provide a more favourable risk return profile than this offering. Unless you are looking for U.S. equity exposure with very little downside risk, you are most likely better off looking elsewhere for the near term.