Standard Life Canadian Dividend Growth Fund

Analysis: Many years ago, this dividend focused equity fund was a favourite among many advisors and analysts. Sadly, a number of managerial missteps over the years have brought us to where we are today. Recent performance has shown signs of improvement, but we are still far from giving it our recommendation.

Today, the fund is managed by Neil Matheson, who returned to the manager’s chair in late 2010. Mr. Matheson had run this fund in its glory days, which gives us cause for optimism. He looks to find high quality companies that have consistent growth prospects. He favours those that have been able to show they can increase dividends over time.

The fund is focused in Canada, but will invest outside of Canada when opportunities are available. At April 30, he held nearly 80% in Canada, 18% in the U.S. with minor exposure to the Eurozone.

It is reasonably diversified, holding more than 50 stocks, while the top ten make up more than 40% of the fund. Given the focus on dividends, it is not surprising to see it heavily concentrated in financials and real estate, which make up about 40% of the fund. It is significantly underweight in materials.

Performance numbers, particularly the longer term numbers have been largely disappointing. However, since Mr. Matheson has taken over, performance has improved and it now tends to be in the middle of the pack.

The cost of the fund is average, with an MER of 2.10%.

Even with the recent improvement to performance, we would be very reluctant to recommend this fund. We don’t think it will hurt you over the long term, but we also don’t expect that it will surprise you to the upside. Basically, we see no compelling reason to own it. We expect that it will continue to deliver average returns with average volatility. The best way to sum this fund up at the moment – average.