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Patience is a virtue at Trimark Global Dividend Class as managers wait to deploy cash
8/17/2017 5:32:08 PM
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By Dave Paterson  | Thursday, April 06, 2017


 

Managed by the team of Michael Hatcher and Jeff Feng, Trimark Global Dividend Class invests in high-quality, dividend-paying companies around the world. It is managed using the Trimark philosophy that looks for well-managed companies that are likely to deliver high returns on invested capital and generate significant free cash flow. Given the dividend mandate, the managers also seek out a sustainable and growing stream of dividends.

The bottom-up process results in a somewhat concentrated portfolio, typically holding around 40 names. Sector mix and country allocations are the by-product of the stock selection process. Perhaps not surprisingly, the sector mix looks much different than its benchmark. At the end of February, it was overweight higher-yielding sectors, such as industrials and consumer defensives. Surprisingly, it was also overweight technology, which is not something you see in a lot of dividend-focused offerings.

As of Feb. 28, top holdings included Wells Fargo & Co. (NYSE: WFC), Walt Disney Co. (NYSE: DIS), Visa Inc. (NYSE: V), Honeywell International Inc. (NYSE: HON), and W.W. Grainger Inc. (NYSE: GWW).

The managers are disciplined on valuation and are not afraid to let cash build when they are having trouble finding opportunities that fit their criteria. At the end of February, the fund held 11% in cash, which will help to provide a buffer against any market selloff. It will also act as a source of “dry powder,” allowing the managers to use periods of higher-than-normal volatility as a chance to step in and pick up high-quality investments at attractive prices, thus improving the quality of the portfolio.

The focus on quality and valuation has paid off, with a 1-year gain of nearly 18%, which makes the fund an above-average performer in the global equity category. In the longer term, numbers are also strong, with a 3-year average annual compounded rate of return of 11.0%, placing the fund in top-quartile performance. Volatility has been lower than both the benchmark and the peer group.

This as a solid core global equity fund for the long term. I would expect some underperformance as the current high levels of valuation normalize, but would still expect strong downside protection compared with the index and peers, resulting from the quality focus and high cash balance.

Trimark Global Dividend Class
Fund company:
Invesco Canada
Fund type: Global Equity
FundGrade Rating: B (February)
Style: Large Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Michael Hatcher since Sept 2013; Jeff Feng since October 2009
MER: 2.62%
Fund code: AIM24913 (Front-end load)
Minimum investment: $500

Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.

 

 
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