| Fund Company | Invesco Canada |
| Fund Type | Global Small / Mid Cap Equity |
| Rating | $$$ |
| Style | Value |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Jeff Hyrich since October 2001 Erin Greenfield since December 2008 |
| MER | 2.69% |
| Code | AIM 1593 – Front End Units AIM 1591 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like other funds that carry the Trimark name, the Trimark Global Endeavour Fund is managed with a common sense approach of buying high quality businesses when they are temporarily out of favour. Management scours the globe looking for well managed, small and mid cap companies that have strong management, high quality balance sheets, low debt, and demonstrated growth potential that are trading at a discount to their prospective earnings growth and cash flow. They like to see this margin of safety between the stock’s market value and its intrinsic value as it provides a buffer against permanent loss of capital for the investors.
The portfolio tends to be very concentrated, typically holding no more than 25 companies. As of July 31, more than half of the fund was made up of the top ten holdings. It is very consumer focused with 32% of the fund invested in consumer discretionary names and 15% in consumer staples. A very patient approach is used when managing the fund, with portfolio turnover averaging about 25% per year.
Performance has been strong of late, finishing first quartile every year since 2009. Despite this strong relative performance, its distinct management style can result in periods of underperformance. For example, in 2007 and 2008, the fund lagged the index and the category, only to bounce back sharply in 2008 and 2009.
The managers believe that equities are offering a more compelling risk reward tradeoff when compared to bonds. Their rationale is that the spread between earnings yield on equities and treasury bills at its widest peak since the mid 1970s. They are also embracing the recent market volatility and have used it as an opportunity to find some high quality names trading at reasonably compelling valuations.
We like this fund as a way for medium or high risk investors to gain exposure to high quality global small and mid cap stocks. However, investors need to be aware that it can be a very volatile fund. Further, from a valuation standpoint, large caps appear to be more attractively valued than small and mid cap stocks. As such, we would suggest some level of caution with the fund at the moment, and would suggest limiting exposure in a portfolio to between 5% and 10% depending on the investor.