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Multi-year A+ Award winner EdgePoint Global Growth & Income Portfolio churns out the gains
10/21/2017 6:05:19 AM
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DUE DILIGENCE
Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert



By Dave Paterson  | Wednesday, October 04, 2017


 



As a firm, EdgePoint keeps things simple. In addition to the multi-year FundGrade A+® Award-winning EdgePoint Global Growth & Income Portfolio, they offer four funds, and each is managed using the same disciplined, patient, and long-term approach. Regardless of the security type, the management team looks to build a concentrated portfolio of high-quality businesses they can buy at prices that are well below what they believe they are worth.

The management team consists of Geoff MacDonald, Ted Chisholm, Andrew Pastor, Tye Bousada, and Frank Mullen. (And it’s worth clicking through just to read their very entertaining bios!) The managers have a fair bit of flexibility around the asset mix for the EdgePoint Global Growth & Income Portfolio, which is a balanced fund.

The fixed-income portion can range between 25% and 60%, depending on where they see the most attractive opportunities. At the end of June, they held roughly 61% equity, 39% in corporate bonds, and the balance in cash.

On the fixed-income side, the fund can invest in both investment-grade and high-yield issues, and as at the end of May, the average credit quality was listed by Morningstar as BBB.

On the equity side, the managers use a fundamentally-driven, bottom-up investment process that looks for high-quality, undervalued businesses.” Not surprisingly, this bottom-up approach results in a portfolio that is significantly different than its benchmark or peer group. From a sector perspective, the fund is meaningfully overweight industrials, and underweight the more defensive sectors such as telecommunications, banks, and real estate.

As of the end of June, top holdings included Wells Fargo & Co. (NYSE: WFC), Shiseido Co., Ltd. (TYO: 4911), Anthem Inc. (NYSE: ANTM), WABCO Holdings Inc. (NYSE: WBC), and Ubiquiti Networks Inc. (NASDAQ: UBNT).

Performance has been excellent, with a 5-year average annual compounded rate of return of 14.9%, handily outpacing the benchmark and peer group. A drawback to the fund’s investment approach is that it tends to be more volatile. There is also a likelihood it will experience periods of performance that are dramatically different from what others are doing, both good and bad. But if this is something you can be comfortable with, then the fund is worth considering. It checks all the boxes – a deep management team using a disciplined, repeatable process, and carrying a reasonable cost to investors.

EdgePoint Global Growth & Income Portfolio A
Fund company: EdgePoint Wealth Management
Fund type:
Global Equity Balanced
FundGrade™ Rating: A (August)
FundGrade A+ Awards: 2012, 2013, 2014, 2015, 2016
Style: Bottom Up/Mid-Cap Blend
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Geoff MacDonald, Ted Chisholm, Andrew Pastor, Tye Bousada, and Frank Mullen
MER: 2.01% (Front End)
Fund code: EDG180 (front-end load)
Minimum investment: $15,000

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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