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FundGrade A+ winner Mackenzie Global Dividend Fund a solid long-term offering
5/20/2018 3:35:21 PM
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DUE DILIGENCE
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By Dave Paterson  | Wednesday, April 18, 2018


 



Darren McKiernan took over the reins of the Mackenzie Global Dividend Fund in December 2013 and has done an excellent job, posting above-average results. For the past three-years (to March 31), the fund posted an average annual compounded rate of return of 8.1%, placing it in the first quartile of performance. It has also regularly posted above-average numbers in calendar year returns. The fund has consequently landed the FundGrade A+ Award for two years running, in 2016 and again in 2017.

To achieve this result, McKiernan uses a fundamentally-driven, bottom-up stock selection process that looks to find high-quality, dividend-paying companies that generate stable levels of free cash flow, have a return on capital that is above the cost of capital, and where possible, a thematic tailwind to help drive gains.

Each investment candidate is reviewed using a similar set of metrics, but the manager will adjust each slightly to reflect the specifics of the various sectors. In addition, a discounted cash flow model is run to help determine the intrinsic value for the stock. With this information, the manager will look to buy quality companies at prices well below what their analysis shows it is worth.

The portfolio is built on a stock-by-stock basis, and the sector mix will be the result of this stock selection process. The position size will be dependent on the profit potential, diversification benefits, and overall manager conviction. Typically, a small initial position is taken, and the manager will then build on that.

At the end of March, top holdings included Microsoft Corp. (NASDAQ: MFST), Safran SA (PAR: SAF), Deutsche Boerse AG (XETRA: DB1), Becton Dickinson & Co. (NYSE: BDX), and JPMorgan Chase & Co. (NYSE: JPM).

The maximum weight of any one stock is set at 6%. At the end of March, the fund held 74 names, and was overweight technology, financials, consumer defensive, and industrials. It was underweight real estate, consumer discretionary, energy, and utilities.

One concern I have is with the fund’s valuation levels. When compared with its global dividend peers, the valuation ratios are very high, particularly when the forward-looking growth rates are taken into consideration. This indicates the manager may have to make some changes to the portfolio or face a period of below-trend returns. Still, I see this as a solid global equity offering for the long-term.

Mackenzie Global Dividend Fund
Fund company: Mackenzie Investments
Fund type:
Global Equity
FundGrade Rating: B (March)
FundGrade A+ Awards  2017, 2016
Style: Large Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Darren McKiernan since Dec. 13; Eugene Profis since Nov. 2014; Ome Saidi since Jan. 2015
MER: 2.51%
Fund code: MFC2710 (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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