| Fund Company | BMO Investments |
| Fund Type | Cdn Dividend & Income Equity |
| Rating | A |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Kevin Hall since October 2002
Michelle Robitaille since Jun 03 |
| MER | 2.37% |
| Fund Code | GGF 619 – Front End Units
GGF 260 – DSC Units |
| Minimum Investment | $500 |
Analysis: This, along with the Sentry Canadian Income Fund have been my picks for investors looking for a decent income stream, combined with the potential for capital growth. It pays investors a monthly distribution of $0.06 per unit, which works out to an annualized yield of approximately 4.5%.
Managed by the team of Kevin Hall and Michelle Robitaille, it invests mainly in high yielding common equities and real estate investment trusts (REITs).
The managers look for potential investments in the higher yielding names of the S&P/TSX Composite Index. While yield plays a key role, they are careful not to sacrifice investment quality in order to chase yield. The portfolio holds approximately 40 names, with the top ten making up about a third of the fund.
This used to be an income trust fund. In the olden days, it tended to be more focused on mid-cap names. However, since the demise of the income trusts, it has shifted more into larger cap companies. At the end of July, the top three holdings were TD, Scotiabank, and Royal Bank.
Not surprisingly, it has significant exposure to higher yielding energy names, financials and REITs. Combined, these three sectors make up nearly three quarters of the fund. This concentration highlights one potential drawback to this fund – its high level of interest rate sensitivity. Compared to a more broadly diversified Canadian equity fund, this will be expected to lag when we start to see upward pressure on yields.
Performance has been strong, gaining 16.4% for the five years ending July 31, handily outpacing its peers. More impressive, it has done a solid job in managing both volatility and downside risk. For the past five years, it has only participated in about 25% of the downside movements of the broader equity markets.
Looking ahead, I expect it to continue to deliver above average returns with below average volatility. I also expect it to continue to generate decent cash flow for investors, without significant capital erosion.