Mackenzie Sentinel Income Fund

Analysis: We were a bit concerned about this fund after the retirement of Bill Proctor and the resignation of Chris Kesic back in the summer of 2010. As it turns out, most of our fears were unwarranted as the new team of Steve Locke and Norman Raschkowan have done a good job keeping the fund on track.

While performance may have lagged the benchmark since they took over, it has outpaced most of its peer group, finishing in the upper half of the category. They have done a good job at keeping volatility in check, keeping it in the lower half of the balanced fund category.

The investment process uses a top down macro view to help set the asset mix and sector selection, while a fundamentally driven, bottom up research process helps identify suitable investment candidates.

Within the fixed income portion of the fund, they tend to focus on investment grade corporate bonds, but can shift between government bonds, corporates and securitized debt. On the equity side of the fund, they focus on the big dividend paying companies. To ensure this happens, they will only look at companies that have a market capitalization of at least $1 billion and have a dividend yield of at least 1%. They are also looking for companies that have good management and sustainable earnings growth.

Currently, the fund is conservatively positioned, holding 58% in bonds, 7% in cash and 34% in equity. The asset mix of the fund doesn’t move around a lot, helping to provide some level of consistency in the fund.

It provides investors with a monthly distribution, which is dependent on the series. Our preference is for the Series B units, which pay a monthly distribution of $0.033 per unit, which works out to an annualized yield of just under 5%.

We like this fund as a core balanced fund for low to medium risk investors. We also like it as a good way to generate cash flow for investors through the distributions.