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
FundGrade A+ Awards 2017, 2016
Large Cap Growth
Darren McKiernan since Dec. 13; Eugene Profis since Nov. 2014; Ome Saidi
since Jan. 2015
MFC2710 (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.