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Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert  

By Dave Paterson  | Wednesday, February 22, 2017

Leith Wheeler is one of those companies you don’t hear a lot about. Since 1982, this employee owned shop has quietly gone about its business of managing money for a wide range of Canadian retail, private client, and institutional investors. And one of its top performers is the Leith Wheeler Canadian Dividend Fund.

This dividend-focused offering is managed by the same team using the same process used for the highly-regarded Leith Wheeler Canadian Equity Fund (LWF002). They use a value-focused, bottom-up approach that looks for high quality, conservatively-financed companies that generate attractive returns on capital, and that are trading below what they believe them to be worth.

The portfolio is concentrated, holding around 40 names, with the top 10 making up 47% of the fund.

Current top holdings as of Jan. 31 included Bank of Nova Scotia (TSX: BNS), Royal Bank of Canada (TSX: RY), Brookfield Infrastructure Partners LP (TSX: BIP.UN), Canadian Imperial Bank of Commerce (TSX: CM), and Canadian National Railway Co. (TSX: CNR).

Given the dividend focus, it is not surprising to see the fund overweight in high-yielding financial services names, with a 52% portfolio allocation to the sector, and with very little exposure to materials and healthcare.

The managers tend to be a little more active with this fund than they are with the broader Canadian equity mandate. Over the past five years, portfolio turnover has been roughly double that of their flagship fund, averaging more than 75% per year.

Performance has been strong, with the fund posting an average annual compounded rate of return of 11.1% for the five years ending January 31, while the broader S&P/TSX Composite Index delivered 7.5%. Volatility has been in line with the market. Capital protection has been strong, with the fund participating in just over two thirds of the market downside.

Perhaps the biggest drawback to this fund is its high minimum investment of $25,000 when purchased direct through Leith Wheeler, putting it out of reach for those with smaller accounts. Still, for those with moderate account balances, it is a great core Canadian equity offering.

Fund company: Leith Wheeler Investment Counsel
Fund type:
Canadian Dividend & Income Equity
Paterson Rating: A
Style: Large Cap Value
Risk level: Medium
Load status: No load
RRSP/RRIF suitability: Good
Manager: Leith Wheeler Canadian Equity Team
MER: 1.49%
Fund code: LWF019 (no load)
Minimum investment: $25,000 direct through Leith Wheeler

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

© 2017 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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