Sub-advised by Kansas City, Missouri-based American Century Investments,
the fund invests mainly in U.S. equities, but will typically have between
15% and 25% in convertible bonds. At the end of May, it was well below
this, with just 7% invested in convertible securities.
The investment process is a bottom-up, value-focused one that looks to find
good businesses that are out of favour for what the managers call
“transitory” reasons. To be considered, a company must have a strong
balance sheet, high quality assets, and defendable franchises. Valuation is
a key consideration, but so too is the downside risk of any investment.
Managers Phil Davidson, Michael Liss, and Kevin Toney of American Century
will typically avoid “deep value” names, as they believe there is too much
risk in a back from the brink or reinvention story.
Top portfolio holdings as of June 30 included
Procter & Gamble Co. (NYSE: PG),
Johnson & Johnson (NYSE: JNJ),
iShares Russell 1000 Value Index ETF (NYSE: IWD),
Total SA (NYSE: TOT), and
Republic Services Inc. (NYSE: RSG).
The goal is to deliver a portfolio that has the potential to generate
strong returns, with fewer day-to-day fluctuation than the market. To date,
the managers have done that, with volatility numbers that are lower than
the broader market. The compounded average annual rate of return for the
three years ending June 30 is 15.39%, compared with the benchmark S&P
500 Total Return Index C$ at 17.02%. The fund has also done an excellent
job at protecting capital, participating in only 74% of the downward
movement of the markets for the past three years.
Absolute performance has lagged the S&P 500 Composite Index for the
past three years, but the lower volatility has resulted in better
risk-adjusted numbers. This isn’t a fund I would ever expect to shoot the
lights out. But if you’re looking for a more conservative way to access
U.S. equities, this may be a fund worth a deeper look.
Renaissance U.S. Equity Income Fund
CIBC Asset Management
FundGrade A+ Award:
Large Cap Value
Phil Davidson since Sept. 2013; Michael Liss since Sept. 2013; Kevin Toney
since Sept. 2013
ATL2486 (front-end load)
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
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.
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only and is not intended as personalized investment advice.