| Fund Company | Pembroke Private Wealth Management |
| Fund Type | Canadian Equity Balanced |
| Rating | $$$$ |
| Style | Growth |
| Risk Level | Medium |
| Load Status | No Load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Pembroke Management Ltd. |
| MER | 1.69% |
| Code | GBC 410 – No Load Units |
| Minimum Investment | $100,000 |
Analysis: The GBC Growth and Income Fund is an equity focused balanced fund that takes a strategic approach to asset management in an effort to provide consistent investment income and long term capital growth.
The asset mix is set at approximately 30% fixed income and 70% equity. The fixed income exposure is typically obtained by holding units of the GBC Canadian Bond Fund, while the equity exposure is gained by direct investment in stocks.
The focus of the fixed income sleeve is heavily weighted towards corporate bonds. Nearly three quarters of the bond exposure is invested in high quality corporates with the balance in government bonds.
For the equity component, the focus is on small and mid cap growth stocks. In selecting stocks, the management team looks for strong management teams with a proven track record, strong potential for rapid growth in sales and earnings, high degree of stock ownership by management, financially sound company with a competitive position in the market place, and a level of valuation that is reasonable relative to the prospects.
This approach has yielded decent return numbers for the fund. As of February 29, the fund gained nearly 10% while the category posted a 3.6% loss. Longer term, the numbers are also fairly strong, with a five year return of 3.6% versus a category average of 3.5%. But it hasn’t been all roses for this fund, as the fund struggled in 2008, posting a 25.5% loss and finishing in the bottom quartile.
It is our expectation that this focus on small and mid cap stocks has the potential to result in stronger long term returns, the fund will likely experience periods of heightened volatility. This is a good fund to hold in the early stages of a market rally when small and mid caps are expected to outperform, but may underperform in a more mature, quality focused market.
Another potential drawback to this fund is the high minimum initial investment. To invest in the GBC funds, you must have a minimum $100,000 in family assets with the firm. In comparison other funds are usually available with a $500 minimum.
On balance, for high net worth investors with a long term time horizon, this may be a good fund to consider. However, if your time horizon is less than five years, we would suggest you look elsewhere.