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Number Cruncher

A rough and tumble year for Dynamic Value Add to ...

What are we looking for?

Fund research firm Morningstar Canada recently held its Canadian Investment Awards night to name the 2011 winners. Given that these high-profile funds can spur investors to invest in them, let’s look at how some of the 2010 winners have fared this year.

The screen

Because there are many awards, we limited the winners to 13 of the most popular fund categories, and ones whose performance could be impacted by the euro-zone debt crisis. We looked at returns for the first 11 months of 2011.

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What did we find?

One of the winners is mired in a double-digit loss, and its long-time manager has gone.

Dynamic Value Fund of Canada, which won the award for best fund in the Canadian equity category, has had a rough year, shedding over 19 per cent.

And David Taylor, who ran that fund with a contrarian value approach to investing, is no longer on the job. He quit the Dynamic fund family and Goodman & Co. Investment Counsel Ltd. in October.

He left eight months after Bank of Nova Scotia acquired DundeeWealth Management Inc., which runs the Dynamic fund family. While he tried to negotiate a deal to run Dynamic funds as an external adviser instead of working in a bank culture, that did not work out. He plans to set up his own shop next year.

Despite having a solid track record since 2003, Dynamic Value Fund of Canada struggled this year because of a heavy weighting in hard-hit resource stocks. The fund is now under the wing of Cecilia Mo, who jumped ship from Fidelity Investments Canada, where she ran dividend income funds. Her investment style is more conservative than her predecessor, and perhaps will be a better fit with the new bank bosses.

The lesson for investors is that there are no guarantees about the future performance of award-winning funds, or that a manager will even be around a year later.

If you bought this fund or any others with a deferred sales charge, you could be hit with hefty fees if you decide to redeem early. When buying mutual funds, consider the front-end load option, where the commission is charged at time of purchase. You might be able to get this option without a purchase fee at discount brokers.

Editor's note: Mackenzie Ivy European Class was one of the winners of the Morningstar Canadian Investment Awards in 2010. An incorrect name and returns were published in a table in the original newspaper version of this article and an earlier online version.

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