Recently, a reader asked for more information on the Desjardins Chorus II Portfolios. The Chorus II portfolios are a series of dynamically managed portfolios that invest in mutual funds offered by Desjardins Investments. There are six portfolios available, ranging from Conservative to Maximum Growth, and everything in between.
For the Conservative Portfolio, the target fixed income weight is 72%, with 28% in equity and other growth focused investments. The most aggressive portfolio; Maximum Growth, is focused on equities, with 83% targeted for equities and 17% in fixed income. The other portfolios range between these extremes, and are focused more on balanced investors.
The portfolios are available in both trust version and corporate class versions. The corporate class versions were designed for non-registered accounts, with the corporate class structure allowing for tax free switching between funds, making the tactical nature of these funds rather appealing. However, with the Federal government’s move to eliminate this feature, it becomes less attractive. Further, the asset mixes of the Corporate Class versions have a touch more exposure to equities, making them slightly more risky than the trust options.
The minimum investment is set at $100,000. Costs are not outrageous, particularly for a fund of fund program, ranging from 1.61% at the low end to 2.30% at the high end.
The portfolios invest in a mix of Desjardins offered funds, as well as some ETFs. Some of the Desjardins funds included in the portfolios are Desjardins Canadian Bond, Desjardins Enhanced Bond, Desjardins Canadian Equity Value, Desjardins Global Equity Growth, Desjardins Emerging Markets, and Desjardins Global Small Cap Equity.
The portfolios are well diversified, perhaps too diversified, holding between 15 and 20 underlying funds. According to Morningstar, the number of individual holdings in these portfolios is above 5,000.
The equity sleeve provides a mix of Canadian, U.S., and international equities. The focus is very much on large caps, with just modest exposure to small and mid-cap names. Further, the focus is on developed markets, with very modest emerging markets exposure. This is not unexpected in this type of program.
On the fixed income side, the portfolios are also well diversified. While the focus is on investment grade, there is some exposure to high yield offerings, which will help to enhance yield and reduce interest rate sensitivity.
Putting it all together, the portfolios are okay at best. The reality is that fund companies tend to do well in only a couple of areas, and lag in others. So when a portfolio is built using only one company’s products, the net result is middle of the road performance, more often than not. Further, these portfolios are, at least in my opinion, way too diversified, with exposure to far too many securities. In the end, they look a lot like the index, making it difficult to post above average performance.
If I had to pick, I like the Trust versions of the less risky options, with Balanced Income, and Conservative, being your best bets. Both are very conservatively positioned, with a target of 72% bonds for the Conservative Portfolio and 62% for the Balanced Income Portfolio.
Performance for both has been middle of the pack compared with their peers, although both have lagged their benchmarks. Volatility is in the low end of the peer group, and modestly below the benchmark. On a risk adjusted basis, both look fairly good compared to their peers and benchmarks.
If you’re looking for a one ticket solution, these may be an okay option. However, if you are willing to put a bit of time into it, you can create your own portfolio that will be expected to be much stronger than these offerings.