| Fund Company | Dynamic Funds |
|---|---|
| Fund Type | Cdn Dividend & Income Equity |
| Rating | A |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Oscar Belaiche since July 2001 |
| Jason Gibbs since January 2015 | |
| MER | 2.13% |
| Fund Code | DYN 029 ? Front End Units |
| DYN 729 ? DSC Units | |
| Minimum Investment | $500 |
Analysis: Managed by Oscar Belaiche and Jason Gibbs, this former income trust fund invests in a diversified portfolio of high yielding equity investments like dividend paying common equity and REITs. Using a process dubbed “Quality at a Reasonable Price”, they look for companies that offer sustainable cash flow, hold a dominant position in their industry, and are managed by a high quality management team that holds a significant equity stake in the business.
With a focus on income, energy and financials make up the biggest weights in the fund. As oil started falling, they began positioning the portfolio out of energy producers, moving more into energy infrastructure plays.
Overall portfolio turnover is modest, averaging between 35% and 45% per year. Typically, turnover increases in more volatile markets, as they are able to pick up some higher quality names are more reasonable valuations.
Performance has been decent, but where this fund really earns its stripes is with its significantly lower volatility. It has consistently been less volatile than its peers and the broader equity market. The fund’s volatility has been more in line with a balanced fund than with a pure equity play. Further, it has experienced less than a third of the downside of the broader market, while still delivering two thirds of the upside.
I see a couple of headwinds in the near term. The first is its exposure to energy, which could result in above average volatility while oil finds its footing. Second, the fund by its makeup is fairly interest rate sensitive. While that may not be an issue in the near term, once rates in Canada do start moving higher, the fund may struggle to generate the same level of absolute returns as it has in the past.
On balance, this is a good fund for investors seeking regular income with the potential for capital gains over the long term. The team has done a good job in providing strong total returns, while keeping volatility in check. This is a good fund for investors seeking some level of income with the potential for modest capital gains over the long term.