| Fund Company | Dynamic Funds |
| Fund Type | Global Neutral Balanced |
| Rating | A |
| Style | Blend |
| Risk Level | Low – Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Oscar Belaiche since March 2009 Michael McHugh since March 2009 |
| MER | 2.28% |
| Code | DYN 1560 – Front End Units DYN 1562 – DSC Units |
| Minimum Investment | $500 |
Analysis: This go anywhere balanced fund, managed by the team of Oscar Belaiche and Michael McHugh, invests in a mix of stocks and bonds with the objective of generating a total return that is a mix of yield and long term capital growth. It has no restrictions on market capitalization, industry sector or geographic mix.
Like other funds managed by Mr. Belaiche, it looks for companies which fit into their “quality at a reasonable price” criteria. These types of companies typically generate strong levels of cash flow, have sound balance sheets and sustainable and growing dividends.
The asset mix of the fund will be determined based on their expectations for the economic and market conditions. They will position the fund in a way that will allow them to focus on the most attractive investment opportunities.
In reviewing the current investment climate, Mr. Belaiche believes that we are in a balance sheet recession that will result in periods of slower growth for a much longer time relative to previous recessions. It is his view that the best way to benefit from this is to be defensive.
As a result, the fund currently holds about 29% in bonds, 9% in cash, 6% in alternatives and the rest in equities. Cash will be opportunistically deployed as opportunities arise. Drilling down further, the fund is very well diversified with the top 10 holdings making up about one-third of the fund.
Within the fixed income sleeve, most of the exposure is heavily weighted towards corporates, with only a small exposure to government bonds. The equity exposure is large cap focused. Mr. Belaiche is positive on the REIT sector and is looking to use recent weakness as a buying opportunity. He is also positive on the energy infrastructure and financial sectors which combined make up 31% of the fund. The management process is fairly patient with portfolio turnover averaging around 30% per year since the fund’s launch.
Performance has been strong, gaining and annualized return of 15.7% since it’s March 2009 launch. Volatility has been modest, with a level of volatility that is significantly lower than the broader equity markets and only modestly higher than the fixed income universe. The cost of the fund is reasonable, with an MER of 2.28% is in line with category average
It is available in a trust, corporate class or T-Series. The trust version of the fund pays investors a regular distribution which works out to an annualized yield of approximately 5%, while the yield on the T-Series is north of 8%. These are good options for investors seeking regular cash flow.
Considering the above, we believe that this fund should continue to deliver strong risk adjusted returns for investors however we don’t believe that the absolute levels are sustainable going forward. It is our opinion that this is a good fund for investors who are looking for an actively managed balanced fund that provides decent returns, an income stream and a low to medium risk profile.