| Fund Company | TD Asset Management |
| Fund Type | Miscellaneous – Sector Equity |
| Rating | A |
| Style | Growth |
| Risk Level | Medium – High |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | T. Rowe Price Associates since October 2008 |
| MER | 2.83% |
| Code | TDB 645 – No Load Units
TDB 322 – Front End Units TDB 352 – DSC Units |
| Minimum Investment | $500 |
Analysis: One of the best performing sectors in the past few years has been technology, and this has consistently been one of the strongest funds in the category. For the year ending February 28, it gained 52%, and has generated annualized gains of nearly 28% a year for the past five.
The fund is managed by T. Rowe Price using a fundamentally driven, bottom up, proprietary research approach. Their approach blends qualitative and quantitative, analysis, and is quite collaborative, with analysts and portfolio managers share ideas and knowledge across industry sectors and geographies.
It invests primarily in medium- to large-sized global technology companies that have strong and increasing market share, combined with product pipelines that look to be well positioned for long-term growth.
While the manager focuses on a company’s growth, they are careful not to overpay for that growth. Attention is paid to valuations, and they focus on quality business models and ensuring that multiples are reasonable relative to a company’s history, its peers, and the market.
The focus is primarily in the U.S., but the fund can invest up to 30% abroad. At the end of February, foreign content was near its maximum. Given the focus on technology, the portfolio is concentrated, holding around 60 equity names, with the top ten making up about 45% of the fund.
Performance has been above average, and so too has volatility. Given the narrow focus of the mandate, I don’t expect that will change. It is likely to have periods where volatility is well above average. One area of concern is its cost, with an MER of 2.82%. To date, the fund has more than made up for it, but of we hit a period of lower returns, it will definitely act as a drag.
Considering the above, this is definitely not a core holding, and should only be considered by those who are comfortable taking on a higher level of risk. While some exposure may help boost returns, it may also add to the overall volatility of your portfolio. Given that, I’d limit the exposure to between 5% and 10% for most growth focused investors.