What are we looking for?
Leaders among Canadian dividend and income equity funds.
Dividend-paying securities are becoming more popular as interest rates remain low and stock markets continue their volatility.
We ranked the top 15 performers for the year ended June 30. U.S. dollar, segregated and duplicate versions of funds have been excluded, as well as those geared to accredited investors.
What did we find?
A new kid on the block with the highest one-year return.
First Asset Canadian Dividend Opportunity fund posted a 7.3-per-cent gain, but it may not be a familiar name. The former closed-end fund, which was listed on the Toronto Stock Exchange for two years, converted to a mutual fund in April. Unlike many of its peers, this fund is now 35 per cent in cash and doesn’t own financial stocks.
“We are concerned about what we are seeing out of Europe [in resolving its debt crisis],” said the fund’s lead manager John Stephenson of First Asset Investment Management Inc. “Not only do we have a cash balance, we have a zero weighting to financials because the European banks are undercapitalized ....
“If there is a crisis or the crisis evolves, people will sell these banks, and if they do fall precipitously over the course of a day or a week, that will impact North American financials regardless of whether they have a direct exposure to Europe .... The problem is that the world of finance is interconnected.”
The fund is 17 per cent invested in real estate investment trusts, but the sector “doesn’t have the same upside as it did a year and a half ago,” Mr. Stephenson said. He also owns energy infrastructure, utilities as well as Canadian and U.S. cable and telecom stocks.
Some of his winners over the past year have included names such as TransCanada, Capstone Infrastructure (formerly Macquarie Power and Infrastructure), Telus and Enbridge. His fund even held cash as high as 65 per cent last August when Europe’s debt crisis flared up. “Buy and hold is probably dead and will be dead for at least a decade,” he suggested. “Macro issues are dominant, and they are overwhelming the markets.”
Leaders among Canadian dividend and income equity funds over one year
|Fund||Latest MER||Assets ($ mil.)||1 year to June 30/12|
|First Asset Cdn Div Opportunity-A||2.25*||124.6||7.27%|
|Sentry Growth & Income||2.76||362.4||6.50%|
|Renaissance Millennium High Income||2.5||440.8||6.32%|
|Sentry Canadian Income||2.7||1,718.10||6.31%|
|Dynamic Equity Income||2.15||1,589.00||4.14%|
|Omega Preferred Equity||1.47||440.9||3.94%|
|iShares S&P/TSX Pref Share Idx Com||0.5||1,125.80||3.57%|
|Manulife Preferred Income||2.25||82.1||3.48%|
|Ark StoneCastle Stable Income Class||6.24||n/a||3.05%|
*estimated MER. Source: Lipper
|Fund||Latest MER||Assets ($ mil.)||1 year to June 30/12||2 years to Jun 30/12||3 years to June 30/12||Calendar year rtns. 2011||2010||2009||2008|
|First Asset Cdn Div Opportunity-A||2.25*||124.6||7.27%||16.07%||n/a||11.45%||n/a||n/a||n/a|
|Sentry Growth & Income||2.76||362.4||6.50%||13.53%||15.88%||5.22%||19.51%||26.11%||n/a|
|Renaissance Millennium High Income||2.5||440.8||6.32%||14.87%||14.95%||7.63%||16.55%||21.91%||-31.51%|
|Sentry Canadian Income||2.7||1,718.10||6.31%||14.95%||17.58%||6.07%||18.56%||32.95%||-22.77%|
|Dynamic Equity Income||2.15||1,589.00||4.14%||13.71%||17.36%||9.62%||22.05%||30.48%||-24.60%|
|Omega Preferred Equity||1.47||440.9||3.94%||7.66%||8.91%||5.55%||8.96%||26.62%||-15.99%|
|iShares S&P/TSX Pref Share Idx Com||0.5||1,125.80||3.57%||6.97%||7.65%||5.26%||6.60%||26.24%||-17.11%|
|Manulife Preferred Income||2.25||82.1||3.48%||5.53%||6.05%||4.66%||5.22%||n/a||n/a|
|Ark StoneCastle Stable Income Class||6.24||n/a||3.05%||n/a||n/a||-1.89%||n/a||n/a||n/a|
|iShares S&P/TSX Cdn Div Arist Com||0.64||662.6||2.33%||13.19%||14.64%||6.39%||15.21%||38.24%||-30.41%|
|JOV Leon Frazer Preferred Equity-A||1.87||45.8||2.20%||4.42%||5.82%||3.43%||6.03%||n/a||n/a|
|RBC Canadian Equity Income||2.08||1,724.10||1.47%||17.69%||20.86%||10.34%||23.99%||59.52%||-18.82%|
|BMO Guardian Monthly Dividend Fd Classic||1.46||31.7||1.07%||7.14%||9.79%||4.48%||11.05%||26.05%||-19.97%|
|BMO Guardian Mthly High Income II||2.39||987.9||0.99%||14.30%||17.43%||10.41%||20.73%||34.07%||-27.86%|
|S&P/TSX Total Return||-10.25%||4.15%||6.69%||-8.71%||17.61%||35.06%||-33.00%|