| Fund Company | Dynamic Funds |
| Fund Type | Commodity |
| Rating | F |
| Style | Growth |
| Risk Level | Very High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Robert Cohen since August 2009 |
| MER | 2.43% |
| Code | DYN 2300 – Front End Units DYN 2302 – DSC Units |
| Minimum Investment | $500 |
Analysis: To say that gold has been under a bit of pressure lately might be a bit of an understatement, down nearly 35% from its recent high. Still, there are those who believe that it may be a great buying opportunity, while others believe it has further to fall.
The gold bulls will point to its ability to act as a hedge against inflation. Considering the massive amount of liquidity that has been injected into the financial system in the past several years, they believe that it will push inflation higher. Bears on the other hand, will point out that the near term outlook is not overly encouraging with a strengthening U.S. dollar, and fears that some European central banks will sell gold holdings to raise money. Plus, some central banks have openly discussed ending their massive quantitative easing programs much earlier than originally thought. Any of these can help keep prices in check.
For those considering adding some gold to their portfolios, this fund is an interesting option to consider. Unlike a traditional precious metals fund, it has the ability to invest not only in gold companies, but also to hold gold bullion. Historically, the correlation between the equities and bullion has been high, but in recent years, we have seen somewhat of a decoupling. This allows you to access both.
The mix of equities over bullion is set by the manager, based on their view of the economy and the markets. Ideally, their goal is to hold bullion in periods of high market volatility and overweight gold equities when they are undervalued relative to bullion. The asset mix can range between 30% and 70%. The current mix is about even, with 52% in bullion, and 48% in gold companies. Theory is that this mix should provide better risk adjusted returns when compared to holding either pure bullion or a gold focused fund.
Absolute performance has been abysmal, losing 31% in the 12 months ending April 30. Still, that managed to outperform many of the precious metals equity funds, but lagged the pure bullion funds. Volatility has been much higher than the broader equity markets, but has been considerably less volatile than precious metals equity funds.
Cost is middle of the road, with an MER of 2.43%. CI has a similar fund offering, but it currently has more exposure to gold bullion, which will drag its performance should we see a bounce in gold companies.
This fund, and any other gold focused fund are best avoided by anybody who does not have a very high tolerance for risk. Those who do not should avoid this fund.