Renaissance Global Health Care

Analysis: I am a firm believer in including some healthcare exposure in a portfolio for its defensive characteristics and diversification benefits. This fund used to be my favourite in the sector until the high fees and middle of the road performance dampened my enthusiasm.

The biggest issue facing this fund is its MER, which is currently 3.27%. This is more than 80 basis points higher than my current favourite, CI Global Health Sciences.

One of the things that I have always liked about this fund is that while healthcare has always been thought of as more of a growth type sector, the management team has always used more of a bottom up, value focused approach to stock selection. Because of that, it has tended to be one of the least volatile funds in the category.

Performance, at least on a relative basis has been lackluster for the past few years. While the higher MER is a contributor to that, so too is the manager’s style. The value type opportunities they favoured in the past aren’t as abundant as they once were, making it more difficult for it to generate the types of returns it had historically. It has tended to favour the larger, more established drug companies, while many of its peers had more exposure to biotech companies, which have produced stronger returns of late.

Longtime manager Ed Owens recently retired, leaving the fund in the hands of Jean Hynes, who has been part of the management team for nearly 20 years.

I expect that going forward, performance of the fund will be much like it has been in the past – average returns, below average risk and way above average cost. It’s not a bad fund when used as part of a portfolio, but do believe that you could do better with either the CI or TD healthcare offerings.