| Fund Company | CI Investments Inc. |
| Fund Type | Global Neutral Balanced |
| Rating | A |
| Style | Large Cap Blend |
| Risk Level | Low to Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Eric Bushell since Dec. 2010 |
| MER | 1.60% |
| Fund Code | CIG 686 – Front End Units |
| CIG 786 – DSC Units | |
| Minimum Investment | $500 |
| Minimum Investment | $500 |
Analysis: When I think of best in class balanced funds this one is usually at the top of my list. Managed by the Signature team at CI, it has consistently been one of the strongest performers in the category, yet at the same time has tended to be one of the least volatile.
For the five years ending December 31, it gained an annualized 9.7%, handily outpacing its benchmark and peer group. Even more impressive is that this was done with significantly less volatility. It has also done an excellent job at protecting capital in down markets, with a down capture ratio that is negative. This indicates it was likely positive when the index fell.
The portfolio is a mix of high yielding equities and high yield bonds. Historically, it could invest up to 49% outside of Canada, but that was recently changed to 70%, allowing the managers even greater flexibility. This may come in handy once we see interest rates start to trend higher, giving the managers the ability to find more opportunities abroad. It should also help to reduce the interest rate sensitivity of the equity portfolio which is was highly concentrated in REITs and energy income plays.
Since the summer, they have been selling many of their energy names, not because they saw the swoon in oil coming, but because they felt these names were overvalued. REITs had also had a great run, and gave the team an opportunity to take some profits.
At the end of the year, the fund held approximately 16% in cash and 3.5% in short term bonds. They are using this significant cash balance for two things. The first is to help dampen the heightened volatility caused by the energy selloff and the continued troubles in Europe. Second, it serves as “dry powder” allowing them to step in and pick up quality names at bargain prices after a meaningful selloff.
The fund pays a monthly distribution of $0.07 per unit, which works out to an annualized yield of approximately 5.7%. This makes it a solid choice for those looking for modest cash flow, while providing the opportunity to generate attractive risk adjusted returns over the long term.