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Fund in Focus: Mawer Balanced Fund
3/25/2019 5:56:39 AM
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By Dave Paterson  | Wednesday, December 19, 2018


One of the best balanced funds in the market, Mawer Balanced Fund is managed much like a fund of funds, investing in other Mawer mutual funds. After modest underperformance in 2016, it bounced back with a 10% gain in 2017, matching the benchmark and outpacing its peers. It again posted first-quartile performance in 2018. The fund’s consisted superior performance gives it a steady monthly FundGrade A Grade rating, and has earned it the prestigious annual FundGrade A+ Award every year since 2013.

Manager Greg Peterson adjusts the asset mix of the portfolio based on the risk-reward outlook, and is currently 32% allocated to fixed income and 62% equity, with the remainder in cash. The fund does not have a tactical mandate, so any changes to this mix are very measured and gradual.

Through its holdings of other Mawer funds, the portfolio is diversified quite nicely, with exposure to most key asset classes, including domestic and foreign large- and small-cap stocks, as well as domestic and foreign fixed income. At the end of October, a third of the portfolio was invested in bonds, 16% in Canadian equity, 18% in U.S. equity, and 24% in international equity.

The equity portfolio holds what can best be described as quality companies, and the sector mix is somewhat similar to the benchmark, except for a modest overweight in financials and industrials, and an underweight in healthcare, utilities, and energy. The equity sleeve remains well positioned for most market environments and will likely be the key driver of any potential outperformance.

Fixed income is a bit of a weakness with this fund, with the majority of exposure to investment-grade Canadian bonds and a very modest exposure to global bonds. This positioning looks very much like the indices, resulting in a high level of interest sensitivity, which can dampen returns in a rising yield environment as is anticipated this year.

Overall performance for the fund has been excellent, with a 5-year average annual compounded rate of return of 7.7% to Nov. 30, outpacing the benchmark and peer group. And these returns have come with volatility lower than the benchmark and peer group, resulting in excellent risk-adjusted numbers.

My only real concern is the interest rate sensitivity of the fixed-income sleeve. Still, this remains one of the best choices for investors looking for a one-ticket solution. It offers a very disciplined management process and a rock-bottom MER of 0.94%. Even adding in 1% for dealer compensation, this fund is very reasonably priced compared with many of the available options.

Mawer Balanced Fund
Fund company:
Mawer Investment Management
Fund type: Global Neutral Balanced
FundGrade Rating: A (November)
FundGrade A+ Awards: 2013-2017
Style: Strategic
Risk level: Low-Medium
Load status: No load
RRSP/RRIF suitability: Excellent
Manager: Greg Peterson since June 2006
MER: 0.94%
Fund code: MAW 104 (No-load)
Minimum investment: $5,000

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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