| Fund Company | BMO Guardian Funds |
| Fund Type | Canadian Dividend & Equity Income |
| Rating | $$$$ |
| Style | Blend – Mid Cap |
| Risk Level | Medium |
| Load Status | Optional front or back load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | John Priestman – since inception (October 2002) Kevin Hall – since inception (October 2002) Michelle Robitaille – since June 2003 Ted Macklin – since July 2008 |
| MER | 2.40% |
| Code | GGF 619 – Front End Units GGF 260 – DSC Units GGF 941 – Low Load Units |
| Minimum Investment | $500 |
Analysis: This is an update to our review which was published on October 31, 2011. You can read the original review at https://paterson-associates.com/2011/10/bmo-guardian-monthly-high-income-ii/.
Since our last review, there have been no changes to the management team or the investment process used on the fund. It remains a well diversified, dividend focused portfolio, holding approximately 60 positions, with the top 10 making up 35% of the fund.
As of March 31, the largest sector weightings included financial services, (which includes REITs) was approximately 37% of the fund and energy was 31%.
Performance of the fund has been strong. For the six months ended March 31, the fund gained 8.1%, matching the performance of the S&P/TSX Composite Index. Longer term, its performance relative to both the S&P/TSX and its peer group has been impressive, handily outpacing the index. Volatility remains lower than the broader equity markets, but in the upper half of the dividend income category.
Looking ahead, the manager remains cautiously optimistic and expects that equity markets will continue to be well supported by the monetary easing that continues around the world. While the general outlook is positive, it is not without its risks. Equities have had a strong run in the past six months and while they believe valuations remain attractive, they expect that markets are likely to take a breather in the short term. Other risks which threaten the markets including renewed troubles with Europe’s debt crisis and a slowdown in the emerging markets and China.
From a portfolio positioning standpoint, the manager believes that dividend strategies will continue to provide stability, particularly in periods of market volatility. They are continuing to focus on high quality companies with sustainable dividends and the ability to grow cash flow.
Based on the above, we are increasing our rating from $$$ to $$$$. We believe that the fund is well positioned for the current environment and will continue to provide investors with a stable stream of income from its distributions and the potential for capital growth over the medium to long term