| Fund Company | AGF Investments |
| Fund Type | Canadian Neutral Balanced |
| Rating | F |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Michael White since January 2010
Brian Madden since November 2013 |
| MER | 2.70% |
| Code | AGF 280 – Front End Units
AGF 980 – DSC Units |
| Minimum Investment | $500 |
Analysis: With roots dating back to 1931, this is one of Canada’s oldest funds. Today, the fund is managed by the team of Michael White and Brian Madden using a mix of top down macro analysis and bottom up security selection.
The first step in the process is to determine the health of the global economy and the investment markets. To do this, they look at a number of factors including bond yields, job numbers, leading economic indicators, and investor sentiment. They also look at the fundamentals of the equity markets.
With this information, they will set the fund’s broad based asset mix. Using their real time monitoring process, they will adjust the asset mix based on what risks they see. The more risks identified, the lower the allocation to equities. They have a great deal of flexibility and can invest up to 80% of the fund in any one asset class.
At the end of April, they were positive on the equity markets, with more than 70% invested in equities. Once they have the asset mix set, they will also use macro analysis to set the sector mix of the fund. Individual securities are selected using a fundamentally driven, bottom up stock selection process. They focus on profitable companies with excellent earnings growth visibility and solid balance sheets that are trading at what they believe to be reasonable valuations.
Of late, they have been finding opportunities outside of Canada, particularly in growth and non-resource cyclical names. The fund is overweight in healthcare and consumer names, and is underweight financials, energy and materials. This positioning helps to explain the fund’s underperformance so far this year, after a very strong year in 2013.
While I have been encouraged with the results of late, I will want to see a longer track record before I can recommend it. The managers have been making a number of refinements to their investment process, which appear to be working, but I will need more time to evaluate. Another concern I have with this fund is its cost. The MER is 2.70%, which is high compared to many other balanced funds, and is significantly higher than any of the balanced offerings on my Recommended List of Funds.