| Fund Company | IA Clarington Investments Inc. |
| Fund Type | Canadian Dividend & Income Equity |
| Rating | $$$ – Mutual Fund Update C – Paterson |
| Style | Value |
| Risk Level | Medium |
| Load Status | Optional front or back-end load |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | George Frazer since 1950 Douglas Kee since 2006 |
| MER | 2.43% |
| Code | CCM 1300 (Front End) |
| Minimum Investment | $500 |
Analysis: If you are looking for a fund flash and sex appeal, then you had best keep looking. But if you are looking for a conservatively managed, high quality blue chip equity fund, this fund is definitely worth considering.
The Fund has been managed by George Frazer and his team at Leon Frazer & Associates Investment Counsel since 1950 using a very value focused approach. The team looks for companies with a demonstrated history of growing dividends paid to investors over time based on their belief that “dividend increases drive growth in both income and capital and offer capital protection in volatile markets.” The team also looks for a history of strong earnings, cash flows, and quality management. Valuation is also a concern as the team focuses only on the stocks that they feel are reasonably priced based on their estimate of value and the growth prospects.
There is definite evidence that this process works. During the period between July 2008 and February 2009, the S&P/TSX Composite Index Total Return Index plunged by more than 57%, while the IA Clarington Canadian Conservative Equity Fund was down by 32%.
The portfolio is fairly concentrated, holding approximately 35 companies with the top 10 making up nearly 60% of the total fund. Given the fund’s focus on dividends it is not surprising that the fund is heavily weighted towards financial services, utilities and communications. What may be surprising to some is the fund’s exposure to energy. However, this is a result of many of the pipeline stocks being considered energy. Of the 35% of the fund that is invested in energy, nearly half of it is invested in the more conservative, income generating pipeline stocks.
If there is a drawback to a fund such as this it is that it will lag in up markets. According to IA Clarington, the upside capture ratio of this fund is 65%, which means that on average, if the S&P/TSX Composite is up 1%, this fund will only be up 0.65%.