| Fund Company | EdgePoint Wealth Management |
| Fund Type | Global Equity |
| Rating | $$$$ |
| Style | Bottom Up Value |
| Risk Level | Medium High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Tye Bousada since November 2008 Geoff MacDonald since November 2008 |
| MER | 2.36% |
| Code | EDG 100 – Front End Units EDG 300 – Low Load Units |
| Minimum Investment | $15,000 |
Analysis: Having worked together for a number of years at Invesco, Tye Bousada and Geoff Wilson formed EdgePoint in 2008. At EdgePoint, the investment philosophy is very simple – business people buying businesses. In managing their funds, they look to buy high quality companies that are trading at prices below their estimate of their true worth. They employ a fundamentally driven, bottom up investment process that is based on the old Trimark approach.
The portfolio is very concentrated holding 34 stocks, with the top 10 holdings making up more than two thirds of the fund. Given the investment approach, they are benchmark agnostic. As a result, the fund looks nothing like its benchmark, holding significant overweight positions in technology, healthcare, and consumer discretionary. It has very little exposure to energy and materials, which is not surprising given their emphasis on sustainable free cash flow.
The fund has a go anywhere mandate, but is currently invested very heavily in the U.S. It can invest in companies of any size. Nearly half of the fund is invested in large caps, 40% is invested in mid caps and just under 20% is invested in small caps.
As a result, the fund is more volatile than the broader markets, with a standard deviation that is about 25% higher than the MSCI World Index. Performance has been strong, boasting a three year return of 17.3%, outpacing the MSCI World Index by more than 5%. Shorter term returns have also outpaced the benchmark and the majority of the global equity category.
The managers a long term view when analyzing a company. As a result, portfolio turnover has been relatively modest, averaging just north of 30% since inception. A company is typically sold for two reasons. The first is that the investment thesis on which the company was added is no longer valid. The second reason is that the team has been able to find a better investment idea which they believe improves the portfolio.
The cost of the fund is reasonable. The MER is 2.26% for the front end version of the fund and 2.51% for the back end version.
We are initiating coverage of this fund with a $$$$ rating. It is a good core global equity fund for investors who have a medium to high risk tolerance and a long term time horizon.