| Fund Company | Dynamic Funds |
| Fund Type | U.S. Equity |
| Rating | D |
| Style | Mid Cap Growth |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Noah Blackstein since July 1998 |
| MER | 1.69% |
| Code | DYN 004 – Front End Units DYN 704 – DSC Units |
| Minimum Investment | $500 |
Analysis: Like most of the other funds under the Power banner, this is not for the faint of heart. Manager Noah Blackstein uses a very concentrated, growth oriented approach in managing this fund. Because of this, the fund tends to be considerably more volatile than other U.S. equity funds, with a level of volatility more than 1.5 times the S&P 500 Index.
The first step in the stock selection process is a quantitative screen that looks to identify companies that are showing strong earnings momentum and have a history of upside earnings surprises. Once these companies are identified, the manager conducts a detailed fundamental review focusing on cash flows, management, and the company’s competitive environment.
The result is a very concentrated portfolio. Typically the manager will hold 20 to 30 names in the portfolio. As of November 30, the top 10 stocks in the fund accounted for more than 57% of the fund. There is also typically significant concentration in the fund’s sector exposure, with more than 70% of the fund invested in technology and consumer discretionary stocks. Concentration can be a double-edged sword, amplifying gains in up markets, but offering little refuge when stocks fall.
The manager is also very active in managing the portfolio, with portfolio turnover averaging more than 300% in the past five years.
This is not a cheap fund to own. The management fee is 2.0%, but there is also a performance fee for this fund, which when included in the total costs, can push the MER up considerably.
2012 was a tough year for the fund gaining 0.74% while the S&P 500 gained 13.2% during the same period. Longer-term numbers are quite impressive, with a ten-year return of 6.5% compared with 2.3% for the index.
Despite the strong long-term returns generated by this fund, we would be reluctant to suggest it be used as a core U.S. equity fund. The volatility of the fund is far too high for most investors. Rather, we would suggest that it be used by only those investors with a strong appetite for risk who are looking for a little high octane in their portfolios. Investors should also be willing to accept potentially significant short-term losses.