| Fund Company | Mawer Investment Management Ltd. |
| Fund Type | U.S. Equity |
| Rating | C |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Grayson Witcher since May 2009 |
| MER | 1.19% |
| Code | MAW 108 – No Load Units |
| Minimum Investment | $5,000 |
Analysis: Mawer is one of those fund companies that seems to do most things right. They offer a decent family of funds run by quality managers, following a disciplined repeatable process, all at a reasonable cost.
Manager Grayson Witcher took over Mawer’s U.S. offering in 2009 and really struggled to turn the fund around and differentiate this fund from the pack. Looking at his recent performance however, it certainly appears that he is making progress on that front. For the three years ending October 31, the fund gained an annualized 17.4%, matching the S&P 500 Index, but handily outperforming the majority of its peer group.
Volatility has been higher than the index and appears to be on the rise. Since the new manager took over it has been outperforming the index in up markets, but it has been underperforming when markets fall.
The investment process is very much a research driven, bottom up approach. He is looking for well managed companies that have a history of earning attractive return on capital, strong balance sheets, and a record of delivering strong operational and financial results. Valuation is a consideration, and he will try to buy names when they are trading below their estimate of its true worth. The process is very patient, with portfolio turnover averaging well below 10% for the past five years.
It is fairly diversified, holding just under 60 names with the top ten making up a third of the fund. Sector positions are capped at 20% of the fund based on book value, but recent market growth has brought the weighting of the financial to 22% of the fund. Technology is the next largest sector, coming in at 19%.
One of the biggest plusses of this fund is that the cost is very reasonable, with an MER of 1.19%
I am encouraged by the turnaround that the fund has been having. Still, I do have some concerns, namely the increased downside that the fund has been experiencing since the new manager took over.
I expect that over the long term, you will earn index like returns with slightly higher than index like volatility. Given that, I would likely lean towards the TD U.S. Index Fund over this offering. It offers lower cost, and a very comparable risk reward profile. If you want an actively managed fund, then this really isn’t a bad option.