This is a concentrated portfolio of attractively priced U.S. companies that have distinct proprietary advantages, strong management, industry leadership and a history of strong capital allocation policies.
During the first quarter, it gained more than 6.9%, handily outpacing the S&P 500 and most of its peer group. The main reason it outperformed were its technology and financial holdings, which posted strong gains. The fund’s currency exposure remains unhedged, which helped to boost the overall performance.
Looking ahead, the managers believe that the economic recovery in the U.S. is continuing, and that the recent market selloff was the result of investors once again reevaluating their view on risk. It is expected that earnings growth, which the companies in the fund have plenty of, will take on a greater importance in the weeks and months ahead.
While I expect that this fund can continue to deliver above average returns, I am beginning to get very concerned with its cost. The MER is now nearly 3%, which is likely to be a big drag should we encounter a period of single digit returns for U.S. equities. I am continuing to monitor the fund closely.