| Fund Company | CI Investments |
| Fund Type | Global Equity |
| Rating | $$$$ |
| Style | Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Stephen Jenkins since December 2001 Gerry Coleman since December 2001 |
| MER | 2.44% |
| Code | CIG 14139 – Front End Units CIG 14039 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like all Harbour branded funds, the CI Harbour Foreign Equity Fund is managed using a bottom up process that looks for best of breed companies that are run by strong management teams, with sound balance sheets and the ability to generate superior cash flow. They also like companies that have some level of pricing power and have the ability to grow. Dividends and share buybacks are also factors that are considered when conducting their fundamental review. The end result is a concentrated portfolio that will hold between 30 and 40 names.
Performance has been strong, gaining 8.7% for the three years ending August 31, handily outpacing the MSCI World Index which rose by 4.8% during the same time. The fund has had its share of problems. Between May 2007 and February 2009, it dropped by more than 53% while the index was down 42%. Since then, the fund has risen moved higher, gaining more than 75% off the lows, outpacing the index by a wide margin. This has been largely responsible for the uptick in the fund’s volatility numbers.
Looking ahead, the manager believes that the environment is very supportive for equities based on a number of factors. These factors include the strong pace of growth in corporate profitability, particularly with higher quality companies, the low interest rate environment and the overall level of valuations of the equities relative to other asset classes.
As of August 31, the fund held 15% cash, 44% international equity, 32% U.S. equity and 9% in Canadian equities. It holds about 50 names with the top ten making up about 43% of the fund. Top holdings include credit card issuer Discover Financial Services, drink distributor Diageo, and Bank of New York Mellon, which is one of the world’s largest custodians. The managers are happy with the makeup of the fund, and haven’t been making many changes recently.
Despite the blip in 2008, it is our opinion that this is a great core global equity fund for most investors. We expect that volatility within the fund will settle down in the coming months when compared to the broader market. Apart from the higher volatility that the fund has experienced of late, the other potential knock on the fund is that with a significant cash balance, it may lag the broader market in a market rally. Long term however, we believe that the fund will deliver strong relative returns to investors.