| Fund Company | National Bank Securities |
| Fund Type | Emerging Markets Equity |
| Rating | C – Under Review |
| Style | Blend |
| Risk Level | High |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Patricia Perez-Coutts since August 2012 |
| MER | 2.92% |
| Code | NBC 269 – No Load Units NBC 469 – Front End Units NBC 569 – DSC Units |
| Minimum Investment | $500 |
Analysis: In August 2012, Patricia Perez-Coutts and her team took over the management duties of this fund. At the same time, its name was changed from the Omega Emerging Markets Fund to the Westwood Emerging Markets Fund. This is the majority of the team that was responsible for the success with the AGF Emerging Markets Fund. They will be using the same process on this fund.
The process starts with an initial screen of the investible universe that looks for companies that meet various market cap, trading volume and economic profit screens. This narrows their search universe to between 300 and 400 names. They then conduct fundamental research on a number of investment candidates. They are looking for companies that have a management team that can generate positive economic profit, has a strong business franchise, above average cash flow generation, consistent earnings growth and the ability or the potential to pay dividends to investors.
The result is a well diversified portfolio that will hold approximately 70 names with the top ten making up around 20% of the fund. As of October 31, the portfolio is overweight consumer focused sectors and materials, and underweight financials, technology and telecom. The portfolio has been fully transitioned from the previous management team.
A drawback to this fund is that it is expensive with an MER of 2.92%. While this is high, it is still lower than what it was at AGF.
Looking at the new management team and their process, we expect that we will see a marked improvement in this fund over the old management team with an increase in overall return and lower levels of volatility.
While we ultimately believe that Mr. Perez-Coutts and her team can replicate the type of success they had at AGF, we remain cautious in the short term and will continue to monitor this fund closely. To date, the AGF fund has outpaced this fund, however three months of track record, particularly when the portfolio was in transition is not meaningful.