| Fund Company | BMO Investments |
| Fund Type | Asia Pacific Equity |
| Rating | $$$$ |
| Style | GARP |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Robert J. Horricks since August 2009 Jesper Madsen since March 2011 |
| MER | 2.87% |
| Code | GGF 620 – Front End Units GGF 120 – DSC Units |
| Minimum Investment | $500 |
Analysis: Until recently, China had been posting double-digit growth, resulting in increasing demand for commodities and helping boost productivity in the developed world. In recent months however, Asia has been experiencing a slowdown, which has hurt not only the region, but also dragged the broader markets, highlighting the risks of investing in the area.
Despite this slowdown, there are a number of compelling reasons to invest in Asia, namely the growth opportunities. As with any emerging growth story, there are risks and the potential for high volatility. The BMO Guardian Asian Growth & Income Fund is a great way for investors to access this growth story without taking on excessive volatility risk. While technically classified as an Asia Pacific Equity Fund, it is more of a balanced fund. As of July 31, it held 85% stocks, 13% bonds and 2% in cash.
In building the portfolio, the managers use a fundamentally driven, bottom up GARP process that considers the current fundamentals as well as the long-term growth prospects for a company. They focus on dividend paying shares and U.S. dollar denominated convertible bonds. Dividends are a key element to managing overall portfolio volatility. They believe that if a company is growing dividends, it is highly likely that the company itself is growing. The fund has a dividend yield of 3.8%.
Performance has been strong, outpacing both the index and the peer group by a significant margin. Perhaps even more impressive is that this has been accomplished with a level of volatility that is significantly lower than the category average.
We were concerned last year, when long time manager Andrew Foster left the firm. However, since his departure, the fund has not missed a beat. Performance continues to tick along nicely and we have not noticed any meaningful increase in portfolio volatility.
The fund is a touch on the high side, with an MER of 2.87%. This is in the upper half of the category. The fund also pays a quarterly distribution that varies from quarter to quarter.
This is definitely not to be considered a core holding. Instead, it should be regarded as a fund that can add some incremental return to the portfolio over the long term, and help to reduce overall portfolio volatility.