Manulife World Investment Class

Analysis: The Mawer International Equity Fund has been one of the best international equity funds for as long as I’ve been in the investment business, and this fund is virtually identical to it. The main difference is it has a higher level of cost, which includes embedded dealer compensation.

Like the Mawer offering, it is managed using a “growth at a reasonable price” approach that looks for wealth creating companies that are trading at discounts to their estimate of intrinsic value.

Their research process is one of the strongest in the business, with analysts conducting thorough, in-depth analysis on the company’s business model, financial position, and quality of management. Analysts put their assumptions on each company through a scenario analysis, testing a wide range of outcomes to get a stronger understanding of what the company’s true worth will be under a range of situations.

The portfolio that is made up of between 50 and 60 names, with the top ten making up about a quarter of the fund. Sector and country weights are largely the result of their rigorous stock selection process.

Performance has been stellar, consistently outpacing most of its peers at a level of volatility that is below average. For the past five years, the fund has gained an annualized 11.6%, slightly lagging the MSCI EAFE Index, which gained 11.9%. Except for 2013, it has posted above average returns in every year since its launch in 2006.

It offers decent downside protection, and will outperform the index more often than not. It is managed by a great team, using a rock solid process.

The biggest drawback to it is its cost, with an MER of 2.71%, it is substantially higher than the 1.49% MER of the Mawer International Equity. If you are using a fee based account, I would use the Mawer offering, otherwise, this is a great substitute. Even with the higher cost, I believe this will continue to be one of the best international equity funds available to Canadian investors.