The investment approach is also very simple and to the point. The
management team of
Ted Chisholm, and
Andrew Pastor don’t view investing as buying shares of a company; instead, they view it
as buying an ownership interest in the company, and they look to acquire
this ownership at a price below what they believe it to be worth.
For equities, they use a fundamental, bottom-up approach that looks for
companies of any size that have strong competitive positions, excellent
long-term growth prospects, and strong management teams. They take a
long-term view, typically looking out three to five years, but will use
periods of short-term volatility to improve the portfolio.
Top holdings as of Dec. 31 included
PrairieSky Royalty Ltd. (TSX: PSK),
CES Energy Solutions Corp. (TSX: CEU),
Constellation Software Inc. (TSX: CSU),
Granite Real Estate Investment Trust (TSX: GRT.UN), and
ATS Automation Tooling Systems Inc. (TSX: ATA).
On the fixed-income side, they take a similar approach. They look for
securities they believe can deliver an attractive total return, but that
they can buy at a price well below what it is worth. They tend to focus on
corporate bonds, and can invest in both investment grade and high yield
The mix between stocks and bonds can vary widely depending on their
relative attractiveness. The fixed-income exposure can range between 25%
and 60%. At the end of December, they had 33% in bonds, 61% in equities,
and around 6% in cash.
Performance has been excellent. For the five years ending Jan. 31, the fund
delivered an average annual compounded rate of return of 9.8%, handily
outpacing its benchmark and peer group. Given the all-cap approach of the
equity sleeve, volatility has been higher than average. But even with this
higher volatility, risk-adjusted returns have outpaced.
Looking ahead, I see this trend continuing, with above-average returns but
with higher volatility.
EdgePoint Canadian Growth & Income Portfolio
EdgePoint Wealth Management
Canadian Equity Balanced
FundGrade Rating: A (January)
FundGrade A+ Awards: 2014-2107
Geoff MacDonald, Tye Bousada, Frank Mullen, Ted Chisholm, and Andrew Pastor
1.70% (front-end units)
EDG188 (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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