| Fund Company | Dynamic Funds |
| Fund Type | Canadian Focused Equity |
| Rating | C |
| Style | Growth |
| Risk Level | High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Cecilia Mo since October 2011 |
| MER | 2.39% |
| Code | DYN 040 – Front End Units DYN 740 – DSC Units |
| Minimum Investment | $500 |
Analysis: After long serving manager David Taylor left Dynamic in October 2011, Cecilia Mo was handed the reins of the fund. Under her leadership, there have been a few changes to the fund including significant changes to many of the fund holdings.
The first change is that she cut the fund’s exposure to commodities substantially. Currently, the fund is very well diversified with a makeup that is quite different from the index. Energy is the largest sector, representing 17% of the fund, followed by healthcare, industrials and technology. It is very underweight in both financials and materials.
Another change that was made was the number of securities in the portfolio was increased substantially. Under Mr. Taylor’s leadership, the fund typically held approximately 25 stocks. As of January 31, it held more than 60 names with the top ten making up a more modest 34% of the fund.
The fund has the ability to invest up to 49% of its assets outside of Canada. It is expected that Ms. Mo will use this as an opportunity to invest in areas that are underrepresented in the Canadian market, most notably in the healthcare and consumer sectors. Of the equity exposure in the fund, slightly more than half is in Canada with the balance in the U.S.
Performance since the manager change has been strong. For the year ending January 31, the fund gained 10.3%, outpacing the S&P/TSX Composite and finishing in the top quartile. Much of this outperformance was driven by the fund’s U.S. exposure.
Looking ahead, we expect that volatility, on both an absolute and relative basis will be lower than it was under Mr. Taylor’s leadership because of the broader sector exposure and the increased number of holdings. But, given Ms. Mo’s focus on cheap stocks, there still may be periods of higher volatility, but not to the same extent as under the Mr. Taylor.
We expect that the fund’s performance will be much different than the index. The sector makeup is much different, which will result in periods of both outperformance and underperformance.
It is too early to make a definitive call on this fund, but the early indications are definitely positive.