| Fund Company | CI Investments |
| Fund Type | Canadian Focused Equity |
| Rating | $$$ |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Eric Bushell since May 1998 |
| MER | 2.43% |
| Code | CIG 677 – Front End Units CIG 777 – DSC Units CIG 1777 – Low Load Units |
| Minimum Investment | $500 |
Analysis: This Canadian focused equity fund is managed by Eric Bushell and the Signature Advisors team. The process is very much a combination of a top down macro analysis combined with bottom up security selection.
The first step in the process is to develop a comprehensive global outlook for the markets, which takes such factors as economic growth, interest rates, capital market conditions and geopolitical risks into account. Using this review as a framework, the geographical exposure and sector mix is determined based on the regions and industries that are expected to outperform in the anticipated environment.
The stock selection process is completed by the team’s sector specialists who will conduct a holistic review on the company, studying its entire capital structure. This helps them to gain a better understanding of where the best risk adjusted investment opportunities are. A typical company in the portfolio will be financially strong, operate in a business where there are high barriers to entry, have strong brand recognition and be reasonably valued relative to the growth potential.
This process is a fairly active one, as portfolio turnover is typically more than 100% per year, meaning that the manager is holding the stocks in the portfolio for less than a year. The process is also very tactical. The manager is not afraid to use cash as a way to be defensive in periods of elevated valuations or above average volatility. Current cash sits at just under 2%.
Performance has been decent on a relative basis, and with the exception of 2010, has finished in the first or second quartile for the past ten years. The five year return as of March 31 was 0.5%, which lagged the S&P/TSX Composite, but did outpace many other Canadian equity funds. Volatility for the fund is typically lower than both the index and the category average.
The manager is having considerably more trouble finding quality Canadian stocks, given the significant concentration in energy, materials and financials. Within the fund, those sectors make up 54%, which is significantly less than the 77% benchmark weight.
Given the manager’s approach, combined with historic performance, volatility profile and reasonable cost, we believe that this is a great core fund for investors with at least a medium risk tolerance and a long term time horizon. We are reducing our rating from $$$$ to $$$.