| Fund Company | AGF Investments |
| Fund Type | Emerging Markets Equity |
| Rating | B |
| Style | Blend |
| Risk Level | Medium High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Stephen Way since May 2012
Alpha Ba since May 2012 |
| MER | 3.11% |
| Code | AGF 791 – Front End Units
AGF 691 – DSC Units |
| Minimum Investment | $500 |
Analysis: Until the May 2012 departure of manager Patricia Perez-Coutts, this was hands down my favourite emerging markets fund. Over most time periods, it had outperformed both its index and its competition, and done so with much less volatility. If there was a drawback to its performance, it was that it tended to lag in rising markets, but more than made up for it when things got rocky.
Under the management team of Stephen Way and Alpha Ba, things don’t appear to have changed much. They are following the very same investment process that starts with a screening process that scans the universe for companies that meet various market cap, trading volume and economic profit screens. Companies must also generate positive economic profit, have a strong business franchise, above average cash flow generation, consistent earnings growth and the ability or the potential to pay dividends to investors. They conduct fundamental, bottom up due diligence on companies that meet their screens. The portfolio tends to hold about 70 names, with the top ten making up about 20% of the fund.
Because of the consistency in process, there really hasn’t been a significant erosion of the risk reward characteristics of the fund. The portfolio looks like it did under the previous manager, and the performance is quite similar to that of the fund Ms. Perez-Coutts is managing for Westwood.
The biggest knock on this fund is its cost. The MER is now sitting at 3.11%, which is well above the category average.
If you have held the AGF fund and are happy with it, there is no real compelling reason to sell it. I don’t expect that we will see a big erosion in the risk reward profile, and it should continue to deliver better than average long term returns with much less volatility. However, if you are looking for more upside when markets are moving higher, and are comfortable taking on a higher level of risk then you may want to consider the Brandes Emerging Markets Fund, which has been another one of my favourites in the category.