| Fund Company | Sentry Investments |
|---|---|
| Fund Type | Canadian Neutral Balanced |
| Rating | A |
| Style | Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| Manager | Michael Simpson since Jan ‘12 |
| James Dutkiewicz since May 12 | |
| MER | 2.23% |
| Fund Code | NCE 734 – Front End Units |
| NCE 334 – DSC Units | |
| Minimum Investment | $500 |
Analysis: This conservatively managed balanced fund is managed by the team of Michael Simpson, who runs the equity sleeve, James Dutckiewicz, who is responsible for the fixed income and broader asset mix.
The equity portion is managed in a similar way to the highly regarded Sentry Canadian Income Fund, although this fund’s smaller size allows it to take more of an all cap approach. Like other Sentry managed funds, it has been increasing its exposure to the U.S. in recent quarters. At the end of March, more than 25% of the fund was invested in the U.S.
The fixed income sleeve is very heavily weighted towards corporate bonds, which make up more than three quarters of the bond exposure. While the focus is on investment grade bonds, about one quarter is invested in high yield bonds. On a whole, the bond sleeve offers investors a higher yield than the FTSE/TMX Bond Universe, with a lower duration. This positioning will lessen the overall sensitivity to rising interest rates, while providing better returns in a flat or falling yield environment.
They have a fair amount of flexibility with the asset mix, which can range between 40% and 60% in stocks or bonds. At the end of March, it held approximately 44% in equity, 44% in bonds, and the balance in cash.
The fund’s performance has been very strong, particularly on a risk adjusted basis. For the five years ending March 31, it generated an annualized return of 9.7%, finishing well ahead of the pack. Most of this outperformance can be attributed to the fund’s ability to hold its value in falling markets. I certainly don’t expect that it will continue to outperform as strongly as it has going forward, but I do expect it to be well above average on a risk adjusted basis.
It is also a decent option for those looking for cash flow. It pays a monthly distribution of $0.0375 per unit, which works out to an annualized yield of 3.6 %.
Still, when all things are considered, this looks to be a decent balanced fund for those with a modest appetite for risk.