Last updated: Nov-12-2018

    
 
Fund in Focus: Manulife Dividend Income Plus Fund
11/13/2018 5:43:52 PM
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DUE DILIGENCE
Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert



By Dave Paterson  | Wednesday, October 24, 2018


 



The FundGrade A Grade-rated Manulife Dividend Income Plus Fund (formerly the Manulife Canadian Focused Fund) is managed by the same team, using a nearly identical process as one of my favorites, the Manulife Fundamental Dividend Fund (formerly the Manulife Dividend Income Fund). The managers use a unique multi-step approach that looks to fully understand the value of a business.

With an all-cap mandate, at Sept. 30, the fund was 58% invested in Canadian equity, 21% in U.S. equity, 8% in international equities, and the balance in cash and other assets.

The managers’ process analyzes the quality and risks of a potential investment by scoring each company on several factors, including stability and level of earnings power, managerial skill and ownership, and financial leverage. This generates the inputs for an estimate of fair value, which in turn helps to determine buy and sell prices. A deeper due diligence review is conducted on the most attractive opportunities, including meetings with management.

The portfolio is built as if the managers were putting together a conglomerate company. They strive to ensure there is significant diversification across business risk and return drivers. Each company has a role to play in the portfolio.

The managers are also very active in managing position sizes, and will buy and sell based on the difference between the stock price and their estimate of its real worth.

The portfolio consists of roughly 60 names, with the top 10 making up about 45% of assets. It is overweight consumer services, technology, and industrials, and significantly underweight healthcare and basic materials, giving it a much different profile than the typical Canadian equity fund.

Performance both over both the long and short term has been excellent. In 2017, the fund delivered a 26.5% return, and boasts a 5-year average annual compounded rate of return of 12.7% as of Sept. 30.

Because the portfolio is more concentrated, differing considerably from the index, the fund has been more volatile. But even with the higher volatility, it has done a great job protecting capital in down markets.

Although I still lean towards its sister Manulife Fundamental Dividend Fund, this one is a good option and can be a great core holding for investors with an above-average tolerance for risk.

Manulife Dividend Income Plus Fund
Fund company:
Manulife Investments
Fund Type: Canadian Focused Equity
FundGrade: A (September)
Style: Mid-Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Excellent
Manager: Duncan Anderson since July 2012; Alan Wicks since July 2012
MER: 2.29%
Fund code: MMF4548 (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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