| Fund Company | National Bank Securities |
| Fund Type | Canadian Focused Equity |
| Rating | A |
| Style | Mid Cap Growth |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Brandon Snow since April 2011
Alan Radlo since June 2009 |
| MER | 2.51% |
| Code | NBC 485 – Front End Units
NBC 585 – DSC Units |
| Minimum Investment | $500 |
Analysis:At first glance, this looks very similar to the CI Cambridge Canadian Equity. But dig a little deeper and you will notice some significant differences.
Perhaps the biggest similarity is both funds are managed by the same manager, using a near identical process. Managers Brandon Snow and Alan Radlo look for companies that have a defensive business model, a history of intelligent capital allocation, and a management team whose interests are aligned with the shareholders. The bottom up approach is more growth focused, but valuation is a consideration. It can invest up to 30% of the fund outside of Canada.
The process is very active, with portfolio turnover well north of 100% per year. Further, Mr. Snow is not afraid to use periods of higher volatility as an opportunity to improve the portfolio. Turnover tends to increase with volatility, allowing him to pick up quality names at more attractive prices.
There are some very important differences between the funds. This fund tends to be more mixed across company size, holding significantly more small and mid-cap names than the CI offering. Because of this, the portfolios are somewhat different. This has more exposure to energy, industrials, and consumer names, while holding less in financial services and real estate.
Performance has been strong, handily outpacing the index and peer group since Mr. Snow took the reins. The volatility profile of the fund is equally impressive showing much less variability than the index or peer group. It has outperformed in a rising market, and experienced a fraction of the downside in falling markets. While the absolute level of returns is likely unsustainable going forward, I expect it to be able to deliver above average risk adjusted returns in the near to medium term.
As far as which of the two funds is better really boils down to your situation. Costs are similar, although the CI offering is seven basis points cheaper. If you are looking for more large cap exposure, Cambridge Canadian Equity is the better option, but if you want more mixed cap exposure, this is the better choice.