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Fund in Focus: Manulife World Investment Fund
3/20/2019 5:52:24 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, March 06, 2019


 



For advisors, Manulife World Investment Fund is an excellent international equity fund. In fact, it is the highly-regarded Mawer International Equity Fund in a Manulife wrapper. The full-freight Manulife Advisor Series of this fund has an MER of 2.56%, which includes full dealer compensation. However, for those using fee-based accounts, the F Series version carries an MER of 1.2%, which is less than the 1.40% charged by Mawer directly for its own fund. Certainly, some investors will be turned off by the higher cost of the Advisor Series, and I get that. But I still believe that this is a case of “you get what you pay for.”

One of the higher-rated international equity funds (for simplicity, I’ll refer to the Advisor Series), its 5-year average annual compounded rate of return to Jan. 30 was 7.4%, outpacing its both its category average peers and benchmark index. The fund has recovered from the year-end market correction, gaining 3.3% in the three months ended Jan. 31, while the category eked out an average 0.9% return in the same period. Volatility has been below the index and peer group, resulting in above average risk-adjusted returns.

Much of the fund’s recent underperformance was the result of the quality focus inherent in the Mawer portfolios. In the broader market, the higher-beta names had been outpacing value names, but that was not sustainable, and the fund has rallied recently as strong fundamentals once again begin to prevail in valuations.

Managers Peter Lampert and David Ragan of Mawer Investments use a highly disciplined investment process, looking for wealth-creating companies that are trading at discounts to their estimate of intrinsic value, and that generate high returns on equity. Mawer’s research process is one of the best in the business and includes a rigorous scenario analysis to get a stronger understanding of a company’s true worth under a range of situations.

The result is a portfolio that is made up of between 50 and 60 names, with the top 10 making up 30% of the fund. Sector and country weights are largely the result of the stock selection process. At the end of January, the portfolio had 66% invested in Europe, about a third in Asia, with the balance in the Americas. Nearly 90% is invested in developed markets, with the rest in emerging markets.

Top holdings as of Jan. 31 included U.K.-based insurance company Aon PLC, U.K.-based product testing firm Intertek Group PLC, Dutch specialty publisher Wolters Kluwer NV, French industrial gas supplier Air Liquide SA, and Japanese retailer Seven & i Holdings Co. Ltd.

This fund remains a top pick for investors looking for a disciplined, well-managed portfolio with a focus on non-North American stocks. If you are a do-it-yourself investor, you’re better off buying through Mawer direct, but for advisors, the Manulife wrapping is the best way.

Manulife World Investment Fund
Fund company:
Manulife Investments
Fund type: International Equity
FundGrade Rating: C
Style: Large Cap Blend
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Excellent
Managers: David Ragan, Peter Lampert
MER: 2.56%
Fund code: MMF4536 (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

© 2019 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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