| Fund Company | Bridgehouse Asset Managers |
| Fund Type | Global Small / Mid Cap Equity |
| Rating | B |
| Style | Small Cap Value |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| Manager | Brandes Management Team |
| MER | 2.71% |
| Fund Code | BIP 152 – Front End Units
BIP 252 – DSC Units |
| Minimum Investment | $500 |
Analysis: This deep value small cap offering from Brandes continues to be one of my favourites in the space. While its performance has been stellar of late, it is really more the process and risk controls that attract me to the fund.
It is managed by Brandes’ Investment Committee using a very collaborative approach. The management team follows a very disciplined and repeatable process that looks to buy companies that are trading a significant discounts to their true value. Each of the team members will do their own review of potential investment candidates, with discussions on each name taking place. It is through these discussions that an investment will be bought or sold within the fund. They also serve to help the team set position sizes, with those names where there is a higher degree of confidence earning a higher weight in the fund.
The portfolio is fairly diversified, holding just under 80 names, with the top ten making up about a quarter of the fund. Sector weights and country allocations are the result of the bottom up stock selection process.
In following this disciplined process, the fund’s performance is often quite different than its benchmark. It can certainly be a test of one’s patience when the fund is lagging its peers and benchmark. However over the long term, it has shown it can be one of the best performers in the category. For the five years ending July 31, it has gained 18.7%, handily outpacing the index and the peer group.
Along with the potential of periods of outperformance, it can exhibit higher volatility than other similar funds. For example, in 2007 and 2008 it was one of the worst performing global small cap funds, only to bounce back sharply in the years following. Despite this, it has shown relatively strong downside protection on average.
Another concern I have is with the cost of the fund. Its MER is higher than average, coming in at 2.71%
Considering the above, I believe this is a great global small cap fund for those who can tolerate the higher level of risk. The potential volatility make this a non-starter for those investors who cannot.