| Fund Company | Dynamic Funds |
| Fund Type | U.S. Equity |
| Rating | B |
| Style | Large Cap Growth |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Noah Blackstein since July 1998 |
| MER | 2.46% |
| Code | DYN 004 – Front End Units
DYN 704 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like most of the other funds under the Power banner, this is not for the faint of heart. Manager Noah Blackstein uses a very concentrated, growth approach in managing this fund. Because of this, it tends to be considerably more volatile than other U.S. equity funds, with a standard deviation that is nearly two times the S&P 500 Index.
His investment ideas come from screening the U.S. market looking for companies that are showing strong earnings momentum and a history of upside earnings surprises. Once identified, he does a detailed fundamental review focusing on cash flows, management, and competitive environment.
The portfolio is very concentrated, typically holding 20 to 30 names, with the top ten making up about half the fund. It is also quite concentrated from a sector perspective, with the overwhelming majority of the fund invested in three sectors; technology, healthcare and consumer cyclical. This concentration can be a double-edged sword, amplifying gains in up markets, but offering little refuge when stocks fall.
It also has the potential to be a rather pricey fund to own. In addition to the typical 2% management fee, operating expenses and HST, it also carries a performance fee for outperforming its benchmark. This can add significantly to the cost of the fund, pushing the MER up considerably.
It has struggled so far this year, after being on quite the tear last year. Looking at the underlying fundamentals of the portfolio, there is even more room to fall. However, when it does bounce back, it will likely take off sharply. Historically, it tends to significantly outperform in rising markets, and underperform dramatically when they fall.
I like this fund, but not as a core holding. It should only be used as a small portion of your portfolio as a way to give it some pep. If you want to invest in this, you have to be able to stomach the jaw dropping declines like we saw in 2008. If you’re looking to add some of this to your portfolio, I would likely hold off for a bit, waiting for a further drop before buying in.