Leith Wheeler is one of those companies you don’t hear a lot about. Since 1982, this employee owned shop has quietly gone about its business of managing money for a wide range of Canadian retail, private client, and institutional investors.
This dividend focused offering is managed by the same team using the same process used for the highly regarded Leith Wheeler Canadian Equity Fund (LWF 002). They use a value focused, bottom up, value drive approach that looks for high quality, conservatively financed companies that generate attractive returns on capital, and are trading below what they believe it to be worth.
The portfolio is concentrated, holding around 40 names, with the top ten making up nearly 45% of the fund. Given the dividend focus, it is not surprising to see the fund overweight in high yielding financial, REIT and utility names, with very little exposure to materials, and healthcare.
The managers tend to be a little more active with this fund than they are with the broader Canadian equity mandate. Over the past five years, portfolio turnover has been roughly double that of their flagship fund, averaging more than 75% per year.
Performance has been strong, gaining an annualized 6.6% for the five years ending May 31 while the broader S&P/TSX Composite Index rose by only 3.4%. Volatility has been in line with the market. Capital protection has been strong, with the fund participating in less than two thirds of the market downside.
Perhaps the biggest drawback to this fund is its high minimum investment of $25,000, putting it out of reach for those with smaller accounts. Still, for those with modest account balances, it is a great core Canadian equity offering.