| Fund Company | IA Clarington Investments |
|---|---|
| Fund Type | Global Equity |
| Rating | C |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Joe Jugovic since July 2014 |
| MER | 2.72% |
| Fund Code | CCM 3071 - Front End Units |
| CCM 3072 - DSC Units | |
| Minimum Investment | $500 |
Analysis: Last July, Joe Jugovic of Calgary based QV Investors took over the management duties of this fund. QV is a shop known for their focus on finding high quality companies trading at attractive valuations.
While their track record on this fund is very short, QV has been running this mandate as a pooled fund since January 2007 with great success. This fund is identical to the pooled fund, except that it carries an MER of 2.72%. Yes, this is high, but even with the additional cost, it would have still able to outpace most of its peers over the past five years on a risk adjusted basis. Adjusting for the higher cost, this would have been the number 3 ranked global equity fund in my coverage universe at the end of the year.
The fund is managed using the same disciplined, bottom up process that is used with other QV funds. It looks for high quality, invested management that has delivered strong growth in equity, earnings, sales and cash flows. The company must be generating a level of free cash flow that will allow it to increase dividends over time, and the balance sheet cannot be over levered. Finally, it must be trading at a level of valuation that is well below current market levels, while providing return on equity that is above average.
The portfolio is fairly concentrated, holding roughly 35 names. The sector mix and geographic allocation is a byproduct of the stock selection process. At the end of December, it was overweight communication services, financials and consumer defensive, and underweight utilities and real estate. The fund also has exposure to companies of all sizes, although more than 60% is invested in larger firms.
Looking at the historic track record of the pooled fund, combined with the other QV mandates I follow, I expect this fund to deliver above average returns over the long term. With their focus on higher quality names, it is expected to lag in a sharply rising market, however, it will more than hold its own when markets sell off. The emphasis on yield and cash flow will also help to mitigate overall volatility. The biggest drawback is its higher MER. Still, I see this as a great core global equity fund for most investors.