| Fund Company | Invesco Canada |
| Fund Type | North American Equity |
| Rating | $$ |
| Style | Blend |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Jason Whiting since August 2007 Ian Hardacre since August 2007 Alan Mannik since December 2010 |
| MER | 2.94% |
| Code | AIM 503 – Front End Units AIM 501 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like other Trimark branded funds, the investment discipline used is fairly straightforward. The managers look to build a concentrated portfolio of high quality, well managed businesses that offer a competitive advantage and are trading below their estimate of the businesses true worth. The fund is also free to invest in businesses of any size. Given the fund’s relatively low asset base of $18 million, the manager can actually take advantage of this and take meaningful positions in small and mid cap stocks.
As of March 31, the fund has more than two thirds of the fund invested in small caps, approximately 20% in medium sized businesses and only 10% in large caps. The portfolio is also heavily weighted in technology, with approximately 36% of the fund exposed to the sector. It is north American focused, and currently has about half the fund in U.S. equities, 40% in Canada. It is also nearly fully invested, holding about 3% cash.
It is also a very concentrated portfolio holding only 21 stocks, with the top ten representing more than 70% of the fund. In fact, the fund’s two largest holdings, Lender Processing Services, Inc. which provides loan and mortgage processing services to U.S. banks, and Rocky Mountain Dealerships which sells agriculture and construction equipment through dealers in Western Canada, make up just under a quarter of the fund.
As a result of the fund’s concentrated holdings and small cap focus, it is a very volatile fund. In fact, the volatility has been significantly higher than the broader market, and is even higher than many other small and mid cap focused funds.
Short term performance of the fund has been strong, rising more than 20% in the first quarter of the year. However, it is the longer term numbers that matter and those have not been as impressive. Jason Whiting took over the fund about four years ago, and has a four year return of 4.6%, putting him in the upper half of the category. The fund struggled in 2008 on both an absolute and relative basis, but rebounded nicely in 2009 and 2010. However, a good chunk of those gains were returned after a disappointing 2011, when the fund lost 31%.
Factor in the fund’s 2.9% MER, and high volatility, we are of the opinion that there are better choices available for investors in both the North American Equity and the Canadian and U.S. Small Cap categories.