| Fund Company | Sentry Investments |
| Fund Type | Canadian Dividend & Income Equity |
| Rating | A |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Michael Simpson since February 2002
Aubrey Hearn since January 2012 |
| MER | 2.67% |
| Code | NCE 717 – Front End Units
NCE 317 – DSC Units |
| Minimum Investment | $500 |
Analysis: Managed by the team of Michael Simpson and Aubrey Hearn, this fund invests in a mix of large and mid-cap income producing securities like common equity, fixed income and REITs. Historically, the focus had been in Canada, but given the funds growth in assets, currently sitting at just under $5 billion, they can now invest up to 49% in the U.S. At the end of June, 34% was invested in the U.S.
It is first and foremost an income fund. It pays a monthly distribution of $0.0775, which at current prices works out to an annualized yield of 4.75%. In 2013, more than two-thirds of the distribution was treated as capital gains for tax purposes, with the balance being return of capital.
Given the emphasis on income, they tend to focus on companies that are generating positive and growing levels of free cash flow. They also like to see a management team that have their interests aligned with the shareholders. In addition to high yielding equities, and REITs they may also have limited exposure to preferred shares, corporate bonds, or option strategies.
The process is very much bottom up, with sector mix and country exposure being driven by their stock selection process. As a result, the portfolio looks nothing like the index or its peers.
Performance, particularly the long-term numbers have been very strong. For the five years ending June 30, the fund has gained 17.1%, handily outpacing the broader equity market and most of its competition. More recently however, it has lagged behind. The main reason for that would be it is underweight in materials, financials and energy, whichhavedriven gains.
While this positioning may have hurt shorter term performance, it is also responsible for the stellar downside protection it offers. Historically, it has participated in between 70% and 80% of the markets upside movement, but has only experienced less than 15% of the downside in the past five years.
The biggest drawback to this fund is its cost.
Still, I believe this is one of the best dividend and income fund options available at the moment.