| Fund Company | Jarislowsky Fraser Ltd. |
|---|---|
| Fund Type | Cdn Fixed Income Balanced |
| Rating | A |
| Style | Large Cap Blend |
| Risk Level | Low ? Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Chris Kresic since Oct. 2010 |
| Charles Nadim since Nov. 2012 | |
| MER | 1.70% |
| Fund Code | NBC 3400 ? Front End Units |
| NBC 3600 ? Low Load Units | |
| Minimum Investment | $500 |
Analysis: With bond yields in Canada expected to remain lower for longer than many had expected, investors need to take a more diversified approach to find reasonable levels of income. This conservatively managed balanced fund is certainly one investors may want to consider.
The fixed income sleeve is managed using a top down macro analysis combined with a bottom up security selection process. The macro view helps the managers determine the most appropriate maturity profile and credit mix for the fund. Once this is set, they look for securities that fit the macro view and can help maximize yield.
The equity portion of the fund invests in large, industry leading companies that have strong management teams and a track record of earnings and limited financial leverage. The managers rely heavily on the firm’s in-house equity team, and use a top-down and bottom up economic analysis with a focus on long-term investment themes to help identify the most attractive areas of the market. They believe this allows them to find companies that have long-term, stable earnings prospects.
The fund pays a set monthly distribution. For 2015, it has been set at $0.0362 per month. This works out to an annualized yield of 3.9%.
Performance has been strong, boasting a three year annualized gain of 7.8%, outpacing much of its peer group. Performance has lagged in the past few months, largely because of its exposure to energy and financials.
The other headwind I see this fund facing is its high level of interest rate sensitivity. While the corporate bond exposure will help a bit, it is still very sensitive to rates, which will drag performance when yields finally do start moving higher in Canada.
Still, for very conservative investors, this may be a good choice for those looking for a high quality balanced fund. For those with higher risk tolerances I would suggest that something with a more diversified bond sleeve may be more appropriate.