Despite a rough start in 2011, the performance of CIBC U.S. Small Companies Fund has definitely improved since the new management team led by David A. Daglio at The Boston Company Asset Management took over the fund in August 2010. For the three years ending May 31, the fund gained 15.3%, finishing in the top quartile. Volatility has been higher than both the benchmark and the average of other U.S. small-cap funds.
The Boston Company uses a team-oriented, high-turnover approach in managing the fund. Stocks are selected using a proprietary approach that looks for companies where they expect to see an increase in revenues, earnings, and cash flows. Valuation is a consideration, and the managers look to invest in companies that are trading below their estimate of intrinsic value.
The managers are benchmark agnostic, focusing instead on protecting investors’ capital. They work to avoid stocks or sectors where they see a high level of downside risk. Because of this approach, the portfolio will look much different from its benchmark. It is overweight in financial services, industrials, and technology, while maintaining an underweight exposure to real estate, materials and utilities.
I have been somewhat impressed by the recent turnaround in the performance of this fund. However, it still has a long way to go before it will be one of my favorites. I believe that there are more attractive U.S.-focused small-cap funds around, including some offered by Fidelity, Trimark, and TD. Still, if you are currently invested with CIBC and are looking for some small-cap exposure, this fund should serve you well.
Fund company: CIBC Asset Management
Fund type: U.S. Small/Mid Cap Equity
Fundata FundGrade® Rating: C
Risk level: Medium High
Load status: No load
RRSP/RRIF suitability: Fair
TFSA suitability: Fair
Manager: David A. Daglio since August 2010
Code: CIB 495 (no load)
Minimum investment: $500
See the Fundata FundCard™ for more details.
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 and Mutual Fund and ETF Update, 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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