| Fund Company | Invesco Canada Fund Inc. |
| Fund Type | U.S.Small / Mid Cap Equity |
| Rating | $$$ |
| Style | GARP with a Value Bias |
| Risk Level | High |
| Load Status | Optional front or back-end load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Rob Mikalachki (August 2002) Virginia Au (April 2010) Jason Whiting (April 2011) |
| MER | 2.83% |
| Code | AIM 5523 – Front End Units AIM 5521 – DSC Units |
| Minimum Investment | $500 |
Analysis: This is an update to our review which was published on October 12, 2011. You can read that review at https://paterson-associates.com/?p=101. Since October, there have been no material changes to the fund.
The team of Rob Mikalachki and Virginia Au manage the fund based on the basic Trimark philosophy of “business people buying businesses”. The process used is very much a value focused, bottom up approach where the managers are looking for high quality, well managed stocks that are largely ignored by the rest of the investment world. They look for good management teams that are typically the number one or number two ranked companies in their industry.
The portfolio is concentrated, holding just under 30 names with the top ten make up 43% of the fund. Technology makes up 32% of the fund, followed by consumer discretionary and healthcare. The investment process is a patient one where the managers take a long term view when assessing the prospects of a company. This is reflected in the relatively low levels of portfolio turnover, which has averaged 45% for the past five years.
Cash is currently sitting at just over 25% of the fund, which should help the fund in down markets, but hurt it in a rising market. That has been the case since our last review, as the fund gained 4.9% in the past six months, lagging the 10.4% gain for the Russell 2000. The recent uptick in cash is a result of selling out of positions, namely Solutia Inc and Advanced Analogic Technologies after both received takeover offers. The managers have identified a number of investment candidates, however the recent market activity has pushed valuations out of their buy range, They expect to buy in on any market pullbacks.
We like this fund and are reaffirming our $$$ rating. Investors should be aware that the manager’s disciplined and concentrated style may result in underperformance and higher volatility over shorter term periods. But for investor who are looking for U.S. small / mid cap exposure in their portfolio and are looking for a portfolio that looks much different than the index, this is a good fund to consider for inclusion in your otherwise well diversified portfolio.