| Fund Company | TD Asset Management |
| Fund Type | Canadian Equity Balanced |
| Rating | C |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Doug Warwick since June 1998
Michael Lough since July 2005 |
| MER | 1.47% |
| Fund Code | TDB 622 – No Load Units
TDB 821 – Front End Units |
| Minimum Investment | $500 |
Analysis: There are definitely more than a few things to like about this equity focused balanced fund.
The first thing that jumps out at me is the cost. It has one of the lowest MERs for a balanced fund, coming in at 1.47%. Even at this level, there is still a 0.50% trailer that is paid to advisors. It also pays a monthly distribution of $0.0349 per unit, which works out to an annualized yield of just under 2.25%.
Where this fund really holds its own is with the risk reward profile. Yes, it was hit hard in 2008 dropping more than 23%. Much of that can be attributed to the fixed income sleeve, which at the time was invested mainly in high yield bonds. Since then, the fixed income sleeve has become more like the TD Canadian Core Plus Bond Fund, which is one of my top bond picks. Should we see another 2008, it should hold up much better than it did last time around.
In the past three years, it has only experienced about a quarter of the drops experienced by its benchmark. On the equity side, Doug Warwick and his team use a fundamentally driven, bottom up approach that looks to find well managed companies with strong financials, solid fundamentals, and the ability to pay and grow their dividends.
The result is a fairly concentrated portfolio that is overweight in financials and energy. The top five largest holdings are the big five banks, followed by Canadian Oil Sands, Enbridge and Suncor.
The overall asset mix is set by the manager, with input from TD’s asset allocation committee. Historically, it has been relatively stable, as they are more focused on security selection, rather than making tactical bets.
If I had to list a concern with the fund it is that there is a fairly high level of interest rate sensitivity in it. If we see a big spike in rates, this fund is likely to lag. However, with rates expected to remain relatively low in the near term, I don’t expect it to be a problem for now.