Managed by Brandon Snow and Bob Swanson of CI’s Cambridge Advisors Team, the CI Cambridge Canadian Equity Corporate Class A is a Canadian focused equity fund that invests in large- and mid-sized 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.
The manager can invest up to 49 per cent of the fund outside of Canada, and at the end of December, about 45 per cent of the fund was invested abroad. The portfolio is concentrated, holding around 40 names. Among the top 10 are George Weston Ltd. (TSX: WN), Tourmaline Oil Corp. (TSX: TOU), CGI Group Inc. (TSX: GIB.A), Precision Castparts Corp. (NYSE: PCP), and Adecco SA (VX: ADEN).
From a sector perspective, the fund was significantly underweight materials, and energy, with no exposure to healthcare. It was focused on consumer names, which made up roughly 36 per cent of the fund.
The managers are very active in their approach, with portfolio turnover averaging more than 225 per cent for the past five years. Portfolio turnover is typically higher when markets are falling, as they move to pick up quality names at cheaper prices.
Performance has been strong, with 5-year average annual compounded rate of return at 13.5 per cent, but more impressive is that volatility has been significantly lower than the S&P/TSX Composite Index. The fund has also shown excellent downside protection. For the three years ending November 30, it participated in only 5 per cent of the downside of the market, and for the past five years, it has experienced about half the downside of the index. This has contributed to the fund’s consistent FundGrade A ratings, and its string of Fundata FundGrade A+ Awards, most recently for 2014.
The way this fund is positioned and managed is likely to result in performance that is much different than the index or its peer group, The absolute level of returns is likely unsustainable going forward, but I do expect it to be able to deliver above-average risk-adjusted returns in the near- to medium-term. My biggest worry is that a high level of assets in the fund may impede their ability to effectively implement their process.
Fund company: CI Investments Inc.
Fund type: Canadian Focused Equity
Fundata FundGrade® Rating:A
Fundata FundGrade A+ Rated 2012, 2013, 2014
Style: Large Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
TFSA suitability: Good
Manager: Brandon Snow since June 2011; Bob Swanson since Jan. 2012
MER: 2.44 per cent
Code: CIG2321 (front end)
Minimum investment: $500
— Courtesy Fundata Canada Inc. © 2015. Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc. This article is not intended as personalized advice. Investments mentioned are not guaranteed and carry risk of loss.
