PDF Version of this Issue
WHAT’S NEW
- RRSP Contribution Deadline looms – For those looking to make a last minute contribution to their RRSP, there is still time to do so. The deadline for contributions that can be claimed for the 2012 tax year is March 1, 2013. The maximum you can contribute for 2012 is $22,970, plus any unused contribution room you may have.
- Record Year for Canadian ETFs – 2012 was a banner year for the Canadian ETF industry, which saw net inflows of $12.1 billion according to a report issued by National Bank Financial. BMO led the charge, bringing in more than $5 billion in new assets, followed closely by BlackRock, with their venerable iShares branding attracting $4.7 billion. From an asset class standpoint, fixed income again proved popular with investors, gaining the lion’s share of new money. Specifically, it was preferred shares and corporate bond ETFs that led the way.
- CIBC Monthly Income Manager steps down – David Graham has resigned from his portfolio management duties on a number of CIBC funds including the CIBC Monthly Income Fund. The reason cited was Mr. Graham’s failing health. Colum McKinley will replace him on the fund. We wish Mr. Graham well.
Mutual Fund Recommended List Review-
By Dave Paterson, CFA
Majority of picks in the black for the quarter
With the book on 2012 closed, it is now time to take a look at our Recommended List of Funds and make some changes that we believe will make it even stronger for the year ahead. Our goal is to highlight what we believe are the “best” funds that have the highest probability of continuing to deliver strong risk adjusted and relative returns over the course of a market cycle.
Each of the funds on our list offers what we believe to be a compelling risk reward profile and can play a role in any well diversified portfolio. Because of this, we have decided to no longer publish our Buy, Sell or Hold recommendations on our list. Another reason we have decided to stop doing this by publishing these recommendations, all investors are treated as one homogeneous group with the same investment objectives and risk tolerances. In reality, each individual is different and a Buy recommendation that may be appropriate for one investor may not be for another. We believe that such recommendations may promote a short term bias and result in some investors making actions within their portfolios which may be detrimental to them over the long term.
Instead, we will strive to provide more detailed commentary and discussion around those funds which present an interesting investment opportunity, positive or negative, given the investment outlook. To further simplify the list, we will be reducing overlap where it exists, making it easier for you zero in on what we believe to be the best investment ideas.
Investment Outlook
Not surprisingly, our investment outlook is not markedly different from last quarter. We expect that interest rates will remain on hold. Considering this, the best-case scenario for a bond portfolio is that it will generate a return that is in line with its yield, less fees.
For equities, our outlook is cautious optimism. In the U.S. a deal has been reached to push the debt ceiling negotiations down the road a few months, which effectively reduces near term headline risk, allowing investors to focus on the improving economic fundamentals. In Asia and the emerging markets, signs of a recovery are emerging, and Europe is well, Europe. With improvements in the emerging markets, this should be a positive for Canadian equities near term. However, after years of economic outperformance, Canada is showing signs of a slowdown, which may act as a drag on markets.
With that as our foundation, we favour equities over fixed income. We do not recommend that investors sell their bond holdings, as we believe they are valuable tools in the management of volatility. Rather, we suggest that investors lower their target weightings of fixed income in their portfolios relative to their equity weight.
In equities, we favour North America, particularly the U.S. over the rest of the world, as we believe that the improving economic fundamentals will provide strong support for the markets. There are some interesting opportunities in the emerging markets, but only for those with high risk tolerances. Europe may also present some interesting short term trading opportunities, but again, this would only be appropriate for those with an above average appetite for risk.
Funds Removed From the List
CI Signature Income & Growth (CIG 6116) – Removing this fund from the list was not an easy decision. It is run by a very strong management team, following a disciplined investment process, and has delivered decent results for investors. It also pays a monthly distribution of $0.025 per month, which works out to be an annualized yield of around 6.7%. In our review, we found the fund is highly correlated to the RBC Monthly Income Fund and the RBC Canadian Equity Income, both of which have what we believe to be a more compelling risk reward profile.
Beutel Goodman Income Fund (BTG 771) – As tough as it was for us to remove the CI Signature Income & Growth Fund from our list, removing the Beutel Goodman Income Fund was even more difficult a decision. It has a great team behind it, a low MER and has done a great job for investors. Our reason for removing it has more to do with the outlook for fixed income than with the fund itself. As we know, interest rates are hovering near historic lows and will eventually be moving higher. For the next several months, rates are expected to remain flat. As a result, the upside for bonds is quite muted. In looking at the portfolio positioning of this fund relative to the TD Canadian Bond and the PH&N Total Return Bond, we believe that those funds offer a slightly more compelling risk reward tradeoff at the moment. A note to current investors, if you hold the Beutel Goodman Income Fund, we wouldn’t suggest you sell. It is still a high quality fund and will hold up better than most bond funds, but in our effort to reduce duplication on our recommended list, this is a move we believe needed to be made given the outlook for bonds.
Dynamic Power American Growth Fund (DYN 004) – While the fund has struggled of late, we believe that it will bounce back and reward investors with significant gains. Like all Power funds, this one is volatile, with a level of volatility that is significantly higher than both the benchmark and category average. It is much too risky to be considered a core holding for most investors. For investors looking for a comparable fund with some kick, we would suggest they consider the Dynamic Power Global Growth Fund. The same manager, using the same process and approach, runs it. The main difference is that the global fund has a broader geographic mandate, which we believe will help it outperform over the longer term. Again, given the volatility profile, we do not believe it to be well suited as a core holding, but it can be used as a way to generate some additional return with a small weighting in an otherwise well diversified portfolio.
Funds Added to the Recommended List
Sentry Small Mid Cap Income Fund (NCE 721) – This small cap offering from Sentry invests in a mix of high yielding stocks and trusts. It can also invest in preferreds and convertible bonds. The long-term numbers have been very strong, posting a five year annualized return of 11.6%, compared with a loss of 0.4% during the same period for the BMO Canadian Small Cap Fund. As impressive as the return numbers have been, what really stands out is the low volatility. It has consistently been one of the least volatile funds in the small / mid cap category. It pays a monthly distribution of $0.05 per unit, which works out to an annualized yield of 4.1% at current prices. Sentry looks at this fund as a feeder fund to its highly successful Sentry Canadian Income Fund. Any high quality investment that does not meet the size requirements of the Canadian Income Fund often ends up in this fund. The same investment team, using the same disciplined process, manages both funds. The biggest drawback to this fund is cost, with an MER of 2.79%, which is higher than the category average. This a good conservative choice for those looking for small to mid cap exposure in their portfolios.
RBC Global Corporate Bond Fund (RBF 580) – This fund is a great way for investors to access corporate bonds from around the world. It is invested 50% in the U.S., 23% in Canada, 20% in global bonds, and 7% in emerging markets. Credit quality is very high in this well diversified, actively managed portfolio. More than 75% of the fund invested in bonds rated BBB or above. Given the interest rate environment, we don’t expect that the fund will be able to match its historic performance, but we do expect that it will outperform more government focused, Canada centric bond portfolios. We would not suggest that this be used as a core bond holding, but instead as a portion of the bond component of your portfolio.
Other Fund Highlights
Trimark Global Endeavour (AIM 1593) – Focusing on high quality, well managed mid cap companies that offer sustainable competitive advantages and attractive valuations, this fund has delivered impressive mid-term and long-term results. Despite being well diversified across regions, management has found it increasingly difficult to find undervalued investments that meet their criteria. That, combined with an inflow of new money resulting from new investment mandates has resulted in the cash position in the portfolio to approach 20%. Management intends to be patient and wait for quality businesses and not overpay for growth, which indicates to us that the high cash balance may be in the fund for some time. This can be a double-edged sword. It can help to protect on the downside if markets were to decline, and provide management with the “dry powder” to invest in opportunities as they arise. On the other hand, this high cash balance will act as a drag on performance in market rallies. We will continue to monitor the cash position in this fund.
CI Black Creek Global Leaders (CIG 11106) – With a gain of 20% in 2012, there is little room for debate that the Black Creek Global Leaders Fund had a heck of a year. The managers believe that with coordinated economic stimulus in the U.S., Europe and Asia, the prospects for global economic growth remain strong. They believe that equity prices remain favourable compared to bonds and cash. We don’t disagree, but given the big run-up that the fund had last year, it might be an opportune time to take some profits, and rebalance back to the fund’s target weight within your portfolio.
Cundill Canadian Balanced Fund (MFC 740) – This Canadian focused balanced fund blew its competitors out of the water in 2012, posting a 17.9% gain. This was 1100 basis points higher than the category median for the year. Much of this outperformance can be attributed to the fund’s holdings in U.S. banks, which have rebounded sharply of late. Also pushing the fund higher were the fund’s holdings in Canfor and West Fraser Timber, which have been benefiting from the rebound in U.S. housing. The fund currently holds 62% in equity, 33% in fixed income and the balance in cash. They are finding it increasingly difficult to find suitable investment candidates that meet their criteria. As a result, we expect that cash levels will drift higher in the coming months. While we like this fund for the long term, investors who have held it for a while may want to use this as an opportunity to take some profits and take some money off the table.
Fidelity Dividend Fund (FID 221) – This large cap focused Canadian dividend fund has been on our list since September 2008. We still like the fund and its risk reward profile, but given its relatively low yield, currently around 1%, we don’t consider it to be a good income fund compared to other available options. We view it more as a core Canadian equity fund and have moved it into that category.
The List
Ravens Win Super Bowl – Time to Sell?
By Dave Paterson, CFA
History shows that an AFC victory likely to result in down year in markets
The old adage says that whenever an NFC team wins the Super Bowl, markets move higher, while an AFC victory points to a down year. According to a study prepared by George Kester, a finance professor at Washington and Lee University, this prediction has proven true for 35 of the past 46 Super Bowls. That’s a success rate of 76%. Not bad odds.
This year, the Baltimore Ravens managed to hold off an impressive second half charge by the 49ers to win the game 34-31. Given that the Ravens are an AFC team this doesn’t bode well for the markets in 2013, based on history. Or does it? The Ravens were originally the Cleveland Browns, and NFC team until 1996, when owner Art Modell moved them to Baltimore. Considering this, you could make a very strong case that the Ravens history is in the NFC, in which case markets are expected to move higher.
Regardless, we didn’t wake up on Monday morning and sell all of our equity holdings. While the success rate of this predictor has been impressive, it is important to note that the correlation does not mean causation. In other words, the outcome of a football game cannot have any bearing on stock prices in the real world. Equity prices are driven by a number of factors, including corporate profits and earnings, which are driven largely by the economic environment.
Looking at the U.S. economy, the outlook is one of cautious optimism. Housing is on the rebound, and jobs are being created. Corporate profitability remains positive, although it is expected to slow in the second half of the year. The inflation outlook remains muted, the markets are awash with liquidity and interest rates are on hold for the next few quarters. Each of these factors bode well for equity prices. Considering the above, we are cautiously optimistic for equity markets for 2013.
Bottom Line: We really can’t put too much stock in the outcome of the Super Bowl as an indicator of stock prices, no matter how successful it has been in the past. Instead, we continue to focus on the real drivers of markets and make our picks based on solid fundamentals and outlook, rather than Super Bowl wins and losses.
Model Portfolio Review
By Dave Paterson, CFA
Portfolios post decent gains in second half of the year.
Investors’ risk appetite appeared to have returned in the latter half of 2012, as all major markets and asset classes were in positive territory. Europe was the biggest winner after the European Central Bank stepped in with an aggressive bond-buying program that reduced the likelihood of a blowup in the region substantially. The MSCI Europe Index gained 13.7% in Canadian dollar terms for the six months ending December 31, 2012. Other markets were also positive including the S&P/TSX Composite Index, which gained 8.9%, and the S&P 500, which rose by a respectable 3.4% during the same period.
Not surprisingly, all our portfolios were positive in the second half of the year, with gains ranging from 1.4% for our most conservative to 6.5% for our most aggressive. All the funds in the portfolios were also positive.
Looking ahead, with interest rates expected to remain on hold for the next few quarters and economic growth likely to be modestly positive, we continue to favour equities over fixed income. Still, we do expect that there will be periods of higher than average volatility as much headline risk remains including the debate over the U.S. debt ceiling and the European debt crisis. Because of this, we will not be abandoning our fixed income holdings any time soon. They will continue to be an excellent way to help reduce the overall risk of the portfolios because of their safe haven appeal in periods of uncertainty.
As a refresher for our long time readers and for the benefit of new readers, the following portfolios were created on January 1, 2009, with an initial value of $25,000 each. All mutual funds and ETFs are eligible for inclusion except those that are only available to “sophisticated investors” through offering memorandum. Here is a quick summary of the objectives of each portfolio.
The Ultra-Safe Portfolio: As the name suggests, this portfolio is designed for people who don’t want to worry about their money but are looking for better returns than they’ll get from GICs or money market funds. If it is used in a registered account, you’ll have to substitute for the RBC Monthly Income Fund, which cannot be held in RRIFs, RRSPs, etc.
The Non-Registered Defensive Portfolio: There’s a little more risk and extra cash flow in this portfolio. It is best suited to non-registered accounts where safety and income are the main priorities. The fund targets an average annual compound rate of return of between 4% and 6%.
The RRSP Portfolio: This portfolio is structured in much the same way as a conservatively managed pension plan. Risk is kept to a reasonable level consistent with a long-term annualized growth target in the 6% to 7% range.
The RRIF Portfolio: Cash flow and capital preservation are the goals. The portfolio is designed to provide enough income to avoid dipping into capital for as long as possible, while shielding investors from heavy losses in market downturns. The target return is approximately 6% a year.
The Growth Portfolio: This is suitable for investors seeking higher returns over the long term and who are willing to accept more risk. We aim for a compound annual growth rate of 8% or more. To date, the return has averaged 8.7% per year. This target allows us to maintain risk at reasonable levels. We avoid highly speculative funds.
Here are the latest results to December 31:
ULTRA SAFE PORTFOLIO
| Fund Name |
Weight |
6 Month Return |
Value |
| PH&N Canadian Money Market Fund |
10% |
0.34% |
$2,974.50 |
| PH&N Short Term Bond and Mortgage |
20% |
0.80% |
$5,976.28 |
| TD Mortgage Fund |
15% |
0.67% |
$4,476.43 |
| CIBC Canadian Short Term Bond Index |
15% |
0.55% |
$4,471.09 |
| Beutel Goodman Income |
10% |
0.94% |
$2,992.29 |
| PH&N Total Return Bond |
10% |
1.93% |
$3,021.64 |
| iShares DEX All Corporate Bond Index |
10% |
2.67% |
$3,043.57 |
| RBC Monthly Income |
10% |
4.62% |
$3,101.38 |
| Totals |
100% |
$30,057.17 |
PERFORMANCE TO DATE
| Initial value (January 1, 2009) |
$25,000.00 |
| Value at last review (June 30, 2012) |
$29,644.23 |
| Current value (December 31, 2012) |
$30,057.17 |
| Change since last review |
$412.94 |
| % change since last review |
1.39% |
| % change since inception (4 yrs) |
20.23% |
| Annualized Compound Return since inception |
4.71% |
COMMENTS
The portfolio continued to do exactly what it was designed to do – protect capital while generating a return that is higher than what is offered by a GIC. All the funds were positive during the second half, but the majority of the gains were the result of the iShares DEX All Corporate Bond Index ETF and the RBC Monthly Income Fund.
CHANGES
We removed two funds from the portfolio; the CIBC Canadian Short Term Bond Index and the Beutel Goodman Income Fund. The reason that we made these changes was that they were very highly correlated to other funds in the portfolio that offered better risk reward characteristics. As a result, there was no meaningful benefit to having the funds remain in the portfolio. We also changed the weightings of some of the other funds in the portfolio. The result is a portfolio that offers a higher expected return with less expected volatility.
REVISED ULTRA SAFE PORTFOLIO
| Fund Name |
Weight |
| PH&N Canadian Money Market Fund |
10% |
| PH&N Short Term Bond and Mortgage |
25% |
| TD Mortgage Fund |
30% |
| PH&N Total Return Bond |
15% |
| iShares DEX All Corporate Bond Index |
10% |
| RBC Monthly Income |
10% |
| Totals |
100% |
DEFENSIVE PORTFOLIO
| Fund Name |
Weight |
6 Month Return |
Value |
| PH&N Canadian Money Market Fund |
10% |
0.34% |
$3,215.03 |
| PH&N Short Term Bond & Mortgage |
15% |
0.80% |
$4,844.65 |
| TD Mortgage Fund |
10% |
0.67% |
$3,225.60 |
| PH&N Total Return Bond Fund |
10% |
1.93% |
$3,265.97 |
| Steadyhand Income |
10% |
4.23% |
$3,339.67 |
| Mackenzie Sentinel Income (Series B) |
10% |
2.69% |
$3,290.33 |
| BMO Guardian Monthly Dividend Classic |
10% |
5.03% |
$3,365.30 |
| RBC Monthly Income Fund |
15% |
4.62% |
$5,028.25 |
| Mackenzie Ivy Foreign Equity |
10% |
1.88% |
$3,264.37 |
| Totals |
100% |
$32,839.17 |
PERFORMANCE TO DATE
| Initial value (January 1, 2009) |
$25,000.00 |
| Value at last review (June 30, 2012) |
$32,041.34 |
| Current value (December 31, 2012) |
$32,839.17 |
| Change since last review |
$797.83 |
| % change since last review |
2.49% |
| % change since inception (4 yrs) |
31.36% |
| Annualized Compound Return since inception |
7.06% |
COMMENTS
As the name suggests, this portfolio is very defensively positioned, with only modest direct equity exposure. In June, we added a 10% weighting in the Mackenzie Ivy Foreign Equity Fund. We did this because with interest rates on hold for now and moving higher in the future, we need some equity exposure to provide return. During the past six months, the portfolio gained 2.49% and the equity exposure contributed positively to that. It was the RBC Monthly Income Fund and the BMO Guardian Monthly Dividend Fund that were the main contributors to performance.
CHANGES
This portfolio remains very defensive. We are making a few changes to improve the expected return and to reduce duplication and simplify the portfolio. The first thing we are doing is selling the PH&N Money Market Fund. With those proceeds, we are adding to our position in the TD Mortgage Fund. This move was made to provide the potential for higher returns without taking on substantially more risk. We increased our exposure to the Steadyhand Income Fund and the PH&N Total Return Bond Fund. In both cases, we believe that the funds are well positioned for the current interest rate environment. Finally, we sold the position in the Mackenzie Sentinel Income Fund. The reason is that it is highly correlated to the RBC Monthly Income Fund, which has a more compelling risk reward profile. The net result of these changes is a portfolio with less volatility and a modestly higher expected return profile.
REVISED DEFENSIVE PORTFOLIO
| Fund Name |
Weight |
| PH&N Short Term Bond & Mortgage |
10% |
| TD Mortgage Fund |
20% |
| PH&N Total Return Bond Fund |
20% |
| Steadyhand Income |
20% |
| BMO Guardian Monthly Dividend Classic |
10% |
| RBC Monthly Income Fund |
10% |
| Mackenzie Ivy Foreign Equity |
10% |
| Totals |
100% |
RRSP PORTFOLIO
| Fund Name |
Weight |
6 Month Return |
Value |
| PH&N Canadian Money Market |
5% |
0.34% |
$1,547.54 |
| PH&N Short Term Bond and Mortgage |
15% |
0.80% |
$4,663.89 |
| PH&N Total Return Bond |
15% |
1.93% |
$4,716.17 |
| Steadyhand Income Fund |
15% |
4.23% |
$4,822.59 |
| BMO High Yield US Corporate Bond |
5% |
7.92% |
$1,664.44 |
| Fidelity Canadian Large Cap Fund |
15% |
3.27% |
$4,778.17 |
| BMO Guardian Monthly Dividend Classic |
15% |
5.03% |
$4,859.61 |
| Mackenzie Ivy Foreign Equity |
15% |
1.88% |
$4,713.86 |
| Totals |
100% |
$27,052.41 |
PERFORMANCE TO DATE
| Initial value (January 1, 2009) |
$25,000.00 |
| Value at last review (June 30, 2012) |
$30,845.82 |
| Current value (December 31, 2012) |
$31,766.26 |
| Change since last review |
$920.44 |
| % change since last review |
2.98% |
| % change since inception (4 yrs) |
27.07% |
| Annualized Compound Return since inception |
6.17% |
COMMENTS
The portfolio gained nearly 3% since our last review, with the equity funds contributing more than half of the gains. We still believe that the portfolio may be too conservatively positioned to meet its return target going forward.
CHANGES
We are keeping the broad asset mix roughly in line with the previous period – 60% fixed income focused funds and 40% equity focused funds. Within the fixed income portion, we are increasing our exposure to the Steadyhand Income Fund and BMO High Yield U.S. Corporate Bond ETF, while selling all of our PH&N Money Market Fund and most of our PH&N Short Term Bond and Mortgage Fund holdings. This positioning will give a higher expected return with less expected volatility. Despite the increase in risk, we believe there is better downside protection. As we move forward, we will have to increase our equity weighting further to be able to generate the necessary return. We will continue to do this in a deliberate way and not take on excessive volatility risk.
REVISED RRSP PORTFOLIO
| Fund Name |
Weight |
| PH&N Short Term Bond and Mortgage |
5% |
| PH&N Total Return Bond |
20% |
| Steadyhand Income Fund |
20% |
| BMO High Yield US Corporate Bond |
15% |
| Fidelity Canadian Large Cap Fund |
15% |
| BMO Guardian Monthly Dividend Classic |
15% |
| Mackenzie Ivy Foreign Equity |
10% |
| Totals |
100% |
RRIF PORTFOLIO
| Fund Name |
Weight |
6 Month Return |
Value |
Yield |
| PH&N Short Term Bond and Mortgage |
20% |
0.80% |
$6,655.17 |
2.40% |
| Beutel Goodman Income |
15% |
0.94% |
$4,998.31 |
2.90% |
| iShares DEX All Corporate Bond Index |
10% |
2.67% |
$3,389.32 |
3.90% |
| BMO High Yield US Corporate Bond |
10% |
7.92% |
$3,562.63 |
7.30% |
| Mackenzie Sentinel Income B |
10% |
2.69% |
$3,389.98 |
7.10% |
| BMO Guardian Monthly Dividend Classic |
15% |
5.03% |
$5,200.84 |
3.90% |
| Fidelity Monthly Income |
10% |
3.72% |
$3,423.98 |
2.40% |
| iShares S&P/TSX Capped REIT Index |
10% |
4.49% |
$3,449.40 |
4.40% |
| Totals |
100% |
$34,069.61 |
4.00% |
PERFORMANCE TO DATE
| Initial value (January 1, 2009) |
$25,000.00 |
| Value at last review (June 30, 2012) |
$33,011.74 |
| Current value (December 31, 2012) |
$34,069.61 |
| Change since last review |
$1,057.86 |
| % change since last review |
3.20% |
| % change since inception (4 yrs) |
36.28% |
| Annualized Compound Return since inception |
8.05% |
COMMENTS
Performance in the second half of the year was on pace for our 6% annualized target, gaining 3.20%. For the year however, return lagged, with a 5.25% gain for 2012. All the funds were positive during the period, with the BMO High Yield U.S. Corporate Bond ETF and the BMO Guardian Monthly Dividend Fund contributing the bulk of the performance. At current prices, the portfolio generates an annualized yield of 4.0%.
CHANGES
This being an income focused portfolio, our goal is to continually improve the yield and total return profile, while cutting overall volatility. The first change we made was to switch out the Beutel Goodman Income Fund for the PH&N Total Return Bond Fund. This change improved the risk reward profile of the portfolio and increased the overall yield. We increased our allocation to the BMO High Yield U.S. Corporate Bond ETF, which increases the yield. We added an allocation to the CI Signature High Income Fund, which offers a strong expected total return profile and a compelling 5.9% yield. We sold our position in the Sentinel Income Fund because it was very similar to both the Fidelity Monthly Income Fund and Signature High Income Fund, both of which we like more. We also sold out our iShares S&P/TSX Capped REIT Index ETF because REIT valuations are at or above fair value and better opportunities exist elsewhere at the moment. With these changes, the yield of the portfolio is increased to approximately 4.5% while there is an increase in expected return and a reduction in expected volatility.
REVISED RRIF PORTFOLIO
| Fund Name |
Weight |
Yield |
| PH&N Short Term Bond and Mortgage |
20% |
2.70% |
| PH&N Total Return Bond |
20% |
3.40% |
| iShares DEX All Corporate Bond Index |
10% |
4.10% |
| BMO High Yield US Corporate Bond |
15% |
7.80% |
| Mackenzie Sentinel Income B |
0% |
7.10% |
| BMO Guardian Monthly Dividend Classic |
15% |
4.60% |
| Fidelity Monthly Income |
5% |
2.90% |
| iShares S&P/TSX Capped REIT Index |
0% |
4.40% |
| CI Signature High Income Fund |
15% |
5.90% |
| Totals |
100% |
4.52% |
GROWTH PORTFOLIO
| Fund Name |
Weight |
6 Month Return |
Value |
| PH&N Total Return Bond |
10% |
1.93% |
$3,335.16 |
| Fidelity Canadian Large Cap |
15% |
3.27% |
$5,068.51 |
| Mawer Canadian Equity |
15% |
9.58% |
$5,378.20 |
| Beutel Goodman Small Cap |
15% |
8.68% |
$5,334.03 |
| Beutel Goodman American Equity |
15% |
5.83% |
$5,194.15 |
| Mackenzie Ivy Foreign Equity |
15% |
1.88% |
$5,000.29 |
| Mawer International Equity |
15% |
12.78% |
$5,535.26 |
| Totals |
100% |
$34,845.60 |
PERFORMANCE TO DATE
| Initial value (January 1, 2009) |
$25,000.00 |
| Value at last review (June 30, 2012) |
$32,720.10 |
| Current value (December 31, 2012) |
$34,845.60 |
| Change since last review |
$2,125.50 |
| % change since last review |
6.50% |
| % change since inception (4 yrs) |
39.38% |
| Annualized Compound Return since inception |
8.66% |
COMMENTS
Performance was well ahead of our target return for year. The portfolio gained 6.50% in the past six months and is up 10.2% for the year. The Mawer International Equity, Mawer Canadian Equity and the Beutel Goodman Small Cap Fund accounted for the majority of the gains.
CHANGES
We have been quite happy with all the funds in the portfolio and will not be making any changes. We will be modifying the weightings to improve the risk reward profile of the portfolio. Key changes in clue a reduction in the Beutel Goodman American Equity and the Beutel Goodman Small Cap Fund while increasing the Fidelity Canadian Large Cap Fund and the Ivy Foreign Equity Fund.
REVISED GROWTH PORTFOLIO
| Fund Name |
Weight |
| PH&N Total Return Bond |
10% |
| Fidelity Canadian Large Cap |
20% |
| Mawer Canadian Equity |
15% |
| Beutel Goodman Small Cap |
10% |
| Beutel Goodman American Equity |
10% |
| Mackenzie Ivy Foreign Equity |
20% |
| Mawer International Equity |
15% |
| Totals |
100% |