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Low-volatility Canoe Global Income Fund has good capital protection record
12/14/2018 4:48:42 PM
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DUE DILIGENCE
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By Dave Paterson  | Wednesday, July 11, 2018


 



The Canoe Global Income Fund is a “go-anywhere” fixed-income fund that can invest anywhere in the world, in any type of fixed-income investment, right across the credit spectrum. It can invest up to 25% in high-yield issues, and must have a minimum of 30% in bonds rated A or better.

The fund management team is led by by Brian Westhoff, and relies additionally on the expertise of more than 40 investment professionals. The team uses an investment process that is a mix of top-down macro analysis combined with bottom-up security selection.

Top-down analysis helps the team identify the most attractive areas of the fixed-income spectrum, while the bottom-up process considers many factors, including fundamental and technical metrics.

The managers are very active in their approach and will adjust the portfolio based on the outlook and relative valuation. Their goal is to be very well diversified across different sources of alpha. Accordingly, as of the end of April (the most recent data available), the portfolio was 57% in corporate bonds and 17% in asset-backed securities, 11% in government instruments, and 11% in mortgage-backed securities. About 90% fund’s holdings were rated investment-grade, with the remainder in high yield. Geographically, 78% was invested in the U.S. Almost all the foreign currency exposure is hedged.

Performance has lagged recently, with a 3-year average annual compounded rate of return of 1.2% to May 31, which puts it middle of the pack for the Global Fixed Income category. However, volatility has been well below the index and peer group, with a 3-year average standard deviation of 2.1%. The managers have done an excellent job protecting capital, participating in less than 10% of the downside of its benchmark

Looking ahead, I would expect the fund to continue to deliver stable, consistent returns, when compared with its peer group. This may not be the best-performing fund on an absolute basis, but when you factor in the low or modest volatility, I expect it to be near the top on a risk-adjusted basis.

Canoe Global Income Fund
Fund company: Canoe Financial LP
Fund type: Global Fixed Income
FundGrade Rating: C
Style: Top-down macro; bottom-up security selection
Risk level: Low
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Brian Westhoff since Aug 2013; Brad Doyle since August 2013
MER: 2.07%
Fund code: GOC7001 (Front-end load)
Minimum investment: $2,500 

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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