Manulife Value Fund

Analysis: Roger Hamilton took over the management duties of this fund back in October 2009 and things appear to be on the right track. For the three years ended December 31, the fund gained 4.8%, putting it in the upper half of the category. Longer term performance numbers are not quite as rosy. The five year annualized return is an average loss of 5.6% compared with the S&P 500’s gain of 1.6% during the same period.

The fund is a U.S. focused fund that invests in U.S. based companies that the management believes have unrecognized earnings power. They conduct detailed fundamental analysis on the company’s balance sheet, analyze the industry in which it operates, and understands the barriers to entry and competitive advantage. They look for companies that are trading at a significant discount to intrinsic value and have margin of safety in the nature of their business, potential for high return generation, led by a management team with a demonstrated history of creating value, and possesses an identified catalyst that can unlock the value.

Portfolio turnover is modest, averaging 50% for the past five years. A stock is sold for a number of reasons, including reaching its target price, a noticeable deterioration in the fundamentals, a change in the investment thesis, or a better opportunity is found.

The portfolio is well diversified, holding nearly 70 names, with the top ten making up approximately 32%. At the moment, they favour technology, which is 22% of the fund. Four of the top five names are tech names, including Apple, Qualcomm, Microsoft and Google.

While we have noticed a turnaround, we would be reluctant to recommend the fund at the moment. It is significantly more volatile than the index, and is not cheap, with an MER of 2.58%, which is in the upper half of the category While we believe that the ranking of the fund will improve going forward, we simply believe that there are better U.S. equity choices available for most investors.