| Fund Company | Dynamic Funds |
| Fund Type | Canadian Neutral Balanced |
| Rating | C |
| Style | Growth |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Alex Lane since May 2013
Michael McHugh since July 1998 |
| MER | 2.13% |
| Code | DYN 001 – Front End Units
DYN 701 – DSC Units |
| Minimum Investment | $500 |
Analysis: Alex Lane took over the management of the equity portion of this fund last May, after longtime manager Rohit Sehgal stepped down to focus on managing hedge funds.
The fund has a target asset mix of 50% equity and 50% fixed income. At the end of January, it had approximately 30% invested in bonds, 36% in Canadian equities, 22% in U.S. equities, and the rest in cash. Most of the U.S. exposure is through a holding in the Dynamic Power American Growth Fund, which has posted very strong returns of late.
The equity component is very much like the Dynamic Power Canadian Growth. It is managed using an actively managed growth focused strategy. It is a mix of top down macro analysis and bottom up fundamental research. The portfolio is concentrated, but flexible. About a third of the equity sleeve is invested in mid and small cap names.
The bond sleeve is managed by Michal McHugh, and is heavily tilted towards corporate bonds. The average bond quality is listed as BBB, which is at the lower end of the investment grade scale, which should provide better returns than a portfolio of only government bonds.
Performance for the past year has been strong, with a one year gain of 14.3%, outpacing both the balanced benchmark and most of its peer group. A major contributor to that performance would be the U.S. equity exposure.
Like other Power branded funds, this contains a bit of octane. The volatility, while on the decline, is still significantly above average. In fact, it has exhibited a level of volatility that is roughly in line with U.S. equities. It tends to outperform when markets move higher, but it also has historically been hit much harder when markets fall. Even with the new manager at the helm, I expect this trend to continue.
The biggest issue that I have with this fund is that it is far too volatile. It is supposed to be a balanced fund, but it carries the same level of risk as a diversified large cap equity focused fund. Considering the above, it is my view that there are better balanced funds available for those looking for a more traditional balanced fund offering.