| Fund Company | Dynamic Fund |
| Fund Type | Global Equity |
| Rating | B |
| Style | Growth |
| Risk Level | Medium High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Oscar Belaiche since July 2007 Jason Gibbs since July 2007 |
| MER | 2.60% |
| Code | DYN 2210 – Front End Units DYN 2212 – DSC Units |
| Minimum Investment | $500 |
Analysis: The longer term outlook for infrastructure is quite positive, and the Dynamic Global Infrastructure Fund is our top pick for mutual fund investors looking for exposure to the sector.
It invests in publicly traded companies that hold infrastructure assets directly or are involved in the building or maintenance of these assets. The fund has a go anywhere mandate and can invest in companies of any size. Canadian equities are the biggest component, making up 37% of the fund, followed by U.S. equities at 27% and Global at 23%. It holds 14% cash. Not surprisingly, utilities and energy infrastructure sectors are the biggest components, making up more than 60%. The portfolio is fairly concentrated, holding about 35 names with the top ten making up just under 40% of the fund.
Despite the fund’s recent underperformance, the medium term numbers are impressive. As of February 28, the three year return was 12.8%, outpacing the peer group and the broader equity markets. Volatility has remained in check and is slightly below the volatility of the MSCI World Index. Given the yield characteristics of many infrastructure plays, this is not surprising.
The cost of this fund is reasonable, with an MER of 2.60%, which is about average for the category. The currency exposure is actively managed.
They remain very bullish on the prospects for infrastructure. In a recent commentary they noted that many institutional investors have publicly stated that they are planning to significantly increase their investments in real estate, infrastructure and private equity. The Fund continues to have a major focus on energy infrastructure, utilities, wireless towers and toll roads.
They also noted that while there has been significant multiple expansion in infrastructure names in the recent past that is unlikely to be repeated, other valuation metrics such as free cash flow, growth prospects and private valuation comparables suggest that valuations are still fair.
Given the narrowness of the sector, it could be quite volatile in certain periods. Because of that, it is not a fund for everybody. It is probably best suited to medium to high risk investors looking for some diversification potential without sacrificing yield or return potential.