| Fund Company | Phillips, Hager & North Investment Management |
| Fund Type | Canadian Neutral Balanced |
| Rating | D |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | PH&N Management Team |
| MER | 0.90% – Series D 2.03% – Advisor Series |
| Code | PHN 350 – No Load Units PHN 6350 – Front End Units PHN 4350 – Low Load Units |
| Minimum Investment | $5,000 Series D, $500 Advisor Series |
Analysis: On the surface, the PH&N Balanced Fund is pretty standard, targeting an asset mix of 60% equity and 40% fixed income. Perhaps the most appealing aspect of it is that the bond sleeve is managed by one of the top fixed income shops in the country. Despite this, the fund has continually finished in the middle of the pack, failing to differentiate itself from its peer group.
Looking at the current positioning, it is pretty much neutral to its target asset mix, holding 6.5% in cash, 33.5% in bonds, 35% in Canadian equity and 25% in global equities. Equity exposure is through holding other PH&N managed funds, namely the PH&N Canadian Equity Fund, PH&N U.S. Equity, and the PH&N Overseas Equity Pension Trust. In managing these funds, the managers look for superior management, industry leadership, strong earnings growth, profitability that is better than the industry, solid financial position and trading at a reasonable valuation.
The fixed income portion appears to be more conservatively positioned than the PH&N Bond Fund, with a higher weighting in short term and lower exposure to Government and corporate bonds. The yield and duration are comparable.
The fund’s shorter term performance has been strong with a one year return of 7.1%, outpacing the 4.4% gain of the benchmark and putting the fund firmly in the top quartile. Longer term however, numbers have been less impressive, underperforming the benchmark are on three, five and ten year basis. We believe that much of the longer term underperformance can be attributed to the U.S. and International equity holdings. These offerings from PH&N aren’t their strongest.
The cost is very reasonable, with an MER of 0.91% for the D-Series, which is one of the lowest on the street. However, if you invest in one of the other series of units, the MER is just above 2%, which while lower than the category average, is still high enough to further erode the competitiveness of this offering.
While this is a decent enough fund, we believe that there are better options available for investors. We also believe that investors can do a better job building their own portfolio using the PH&N Total Return Bond, PH&N Canadian Equity, and U.S. and global offerings from other shops such as Beutel Goodman or Mawer.