Beutel Goodman Canadian Dividend Fund

Analysis: For investors looking for a well managed, conservative portfolio of blue chip companies, this fund is definitely one worth considering. The team at Beutel Goodman uses a disciplined value driven approach that emphasizes capital preservation and a focus on delivering absolute returns while managing risk. Their goal is to balance dividend income and capital growth.

The end result is a concentrated portfolio of high quality common stocks, preferred shares and income trusts. It will typically hold in the neighbourhood of 35 holdings, with the top ten representing just under half of the portfolio.

With its emphasis on capital preservation and yield, the fund has significant exposure to financial and consumer focused names, while holds only modest exposure to energy and materials. They remain cautious on resources because of the continued uncertainty in China and the ongoing troubles in Europe. The top ten is filled with a wide range of household names including most of the big banks, Rogers, and Manulife.

Looking at the underlying portfolio metrics, it offers a yield that is higher than the S&P/TSX Composite Index. True to its value philosophy, the portfolio exhibits a lower Price to Earnings Ratio and a lower Price to Cash Flow ratio than the index.

Their approach is a patient one, with portfolio turnover for the past year coming in at 25%. Costs are reasonable with an MER of 1.50%.

Performance has been decent, boasting an annualized three year return of 10.4%, compared to the 6.2% gain in the S&P/TSX Composite. It also offers much better downside protection than the index. For example, in 2008 it lost 20.6% while the index was down 33%. In 2011 the benchmark was down by 8.7% while the fund was up 1.8%.

Despite its likelihood to lag in rising markets, we believe that this is a great core holding for most investors. Over the long term, it is our expectation that investors will be rewarded with strong risk adjusted performance.