For the longest time this has been one of the strongest Canadian focused equity funds around. So far this year it has lagged considerably, gaining 6.5%, which is about half what the S&P/TSX Composite Index earned. The reason is the fund’s lack of exposure to materials, a significant under-weight in energy, and no bank holdings. Unfortunately for investors, these were the best performing sectors in the quarter.
Despite a lackluster six months, I’m not ready to pull the fund from the list. The manager continues to stick with his disciplined value focused process. This will result in periods where return is much different than the broader markets, and I believe that this has been one of those periods. I will continue to monitor the fund for any erosion in the risk reward characteristics.