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Value focus for Trimark International Companies Fund yields A+ Award-winning performance
9/22/2017 4:45:24 PM
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DUE DILIGENCE
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By Dave Paterson  | Wednesday, June 28, 2017


 



Since taking the reins in late 2009, lead manager Jeff Feng has done a great job with Trimark International Companies Fund, posting above-average returns in each year. Co-managed with Matt Peden since 2013, they have earned the Fundata FundGrade A+ Award for three years running, from 2014 to 2016. That’s in large measure a result of how they view their investment choices.

Like other Trimark-branded equity funds, the managers like to view investing more as taking an ownership in a business rather than trading stocks. They tend to focus more on the intrinsic value of a company than its share price, leading to lower levels of portfolio turnover. The result is a high-conviction portfolio of quality companies with strong management, free cash flow generation, excellent organic growth, and sustainable competitive advantages.

Investing in non-U.S. based companies, the managers look to buy good companies trading at a discount to intrinsic value. However, looking at the portfolio valuation metrics, you will see it is not cheap, trading at multiples that are slightly above the market. A reason for this disconnect is that management is willing to pay a higher price for what they believe are high-quality businesses that can deliver over the long-term. They will not sacrifice quality for a cheap price.

As of May 31, top holdings included South Korean technology giant Samsung Electronics Co. Ltd., preferred shares, Chinese consumer staples company Kweichow Moutai Co. Ltd., Belgian global brewer Anheuser-Busch InBev SA/NV, Chinese information technology firm Alibaba Group Holding Ltd. ADR , and French business support services company Bureau Veritas S.A.

This approach has paid off handsomely. To the end of May, the fund has delivered a first-quartile average annual compounded rate of return of 18.35% for the past five years, outpacing its peers by a generous margin. The outperformance for the past year is also impressive, gaining 20.53%, besting its peers by over 200 basis points.

My biggest concern with this fund is its cost, with an MER of just under 3%.

Given the investment process, I don’t expect the absolute level of outperformance to be sustainable over the long-term, but I do believe it can deliver above-average returns with average or better volatility over the long term. I see this as a solid pick for those looking for non-North American equity exposure.

Trimark International Companies Fund
Fund company:
Invesco Canada Ltd.
Fund type:
International Equity
FundGrade™ Rating: A
Fundata FundGrade A+ Award: 2014, 2015, 2016
Style: Large Cap GARP
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Jeff Feng since October 2009; Matt Peden since 2013
MER: 2.98%
Fund code: AIM1733 (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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