Last updated: Dec-17-2018

A grade CI Black Creek Global Leaders Fund outperforms but remains volatile
12/18/2018 8:09:58 AM
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By Dave Paterson  | Wednesday, February 21, 2018


Looking back over the past 10 years, the CI Black Creek Global Leaders Fund has certainly lived up to its name as a leader in the Global Equity category. With a 10-year average annual compounded rate of return of 10.5% as of Jan. 31, it has handily outpaced the MSCI World Index, and left most of its peer group in the dust. The outperformance gives it a current FundGrade A grade for January.

The fund holds a concentrated, go-anywhere portfolio, that invests in companies of any size. The management team, headed by Bill Kanko, looks for market-leading companies that are gaining market share and have sustainable competitive advantages, and that are trading at levels well below what the managers believe it to be worth.

Their approach is based on what they characterize as their “independent thought” process, by which the fund managers must be able to identify a proprietary investment thesis that is different from the market’s view of the company. Before any new idea is added to the portfolio, not only must it offer a more attractive valuation profile, but the managers must also understand why the stock is better than something already in the portfolio.

It is a bottom-up process, which means the geographic exposure and sector mix will be the result of the security selection. As a consequence, the portfolio looks much different than its benchmark or peer group. Geographically, it has significantly less invested in the U.S., which makes up just over a third of the portfolio, compared with more than 62% of the index. Instead, it is overweight Europe, China, and India.

From a sector perspective, it is overweight consumer discretionary and industrial names, and is underweight the more defensive sectors such as consumer staples, healthcare and utilities.

At the end of January, top holdings included European utility Schneider Electric SE (EPA: SU), U.S. tech company Oracle Corp. (NYSE: ORCL), U.S. industrial services firm Nielsen Holdings PLC (NYSE: NLSN), Japanese healthcare company Santen Pharmaceutical Co. Ltd. (TYO: 4536), and U.S. technology firm Booz Allen Hamilton Holding Corp. (NYSE: BAH).

A drawback to the concentrated portfolio is its volatility, which has been higher than the index or peers. With the 3-year average standard deviation of 10.9% at Jan. 31, the fund has a 3-year Fundata Volatility Ranking of 8/10. Historically, it has outpaced in rising markets and lagged in falling markets.

Because of this volatility, I would be hesitant to use it as a core holding. Instead, I see it as a nice complement to a more diversified global fund.

CI Black Creek Global Leaders Fund
Fund company:
CI Investments
Fund type:
Global Equity
FundGrade Rating: A (January)
Style: Large Cap Blend
Prospectus risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Bill Kanko since June 2006
MER: 2.48%
Fund code: CIG11106 (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

© 2018 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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