| Fund Company | Leith Wheeler Investment Counsel |
| Fund Type | Canadian Equity |
| Rating | B |
| Style | Value |
| Risk Level | Medium |
| Load Status | No Load |
| Manager | Leith Canadian Equity Team |
| MER | 1.56% |
| Code | LWF 002 – No Load Units |
| Minimum Investment | $5,000 |
Analysis: When it comes to Canadian equity funds, it doesn’t get a whole lot better than this. It is a simple, no nonsense, consistent fund that does what you expect it to do – deliver above average returns more often than not.
The management team looks at each investment opportunity as if they were buying the whole company. They are looking to find high quality, conservatively financed companies that generate attractive returns on capital, that are trading below what they believe it to be worth. This usually means companies that are under a temporary cloud, or are under competitive pressures. They like to buy companies after a big drop in price, since they believe that it only adds to their margin of safety, reducing the likelihood of big drawdowns.
They work from the philosophy that if you are going to beat the benchmark, you must look different from the benchmark. And that they do. As of June 30, held less than 1% in cash, and was significantly overweight financials and industrials, which combined make up more than half the portfolio. It is underweight in the more volatile energy and materials.
They are not afraid to take meaningful positions in companies they buy. The top ten represents more than half of the fund. It holds a lot of household names including the banks, Canadian National Railway and Canadian Tire.
Portfolio turnover has averaged about 35% a year for the past five years, which shows they are fairly patient in implementing their investment approach. This indicates that they will typically hold a stock for about three years.
While their longer term outlook means they are not driven by short term performance, they have still managed to deliver decent absolute and risk adjusted returns for investors. As of June 30, the five year annualized return on the fund was 2.1%, handily outpacing the 0.5% loss of the index. The three year number is even more impressive at 9.7%, compared to the 5.4% rise in the index during the same period. Volatility has been in line with the index.
There are a number of reasons to like this fund. It offers a very solid management team following a disciplined, repeatable process. It also has a very reasonable 1.56% MER, which is much lower than many advisor sold offerings. For longer term investors, you can’t really go too far wrong with this fund.