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NUMBER CRUNCHER

Global neutral balanced: Seeking winners in the hottest fund sector Add to ...

What are we looking for?

Top-performing global neutral balanced funds. This was the biggest selling fund category last month, according to the Investment Funds Institute of Canada.

The screen

We looked for global neutral balanced funds that have outperformed for the three years to July 31. U.S. dollar, segregated, duplicate versions and funds with a minimum investment greater than $25,000 were excluded.

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Funds in this category need to invest less than 70 per cent of assets in Canadian equity and fixed-income securities. Overall equity holdings must account for at least 40 per cent, but less than 61 per of the fund’s total assets.

What did we find?

The top performer on this screen is a stalwart balanced fund with a 16-year track record.

CI Signature High Income was the top performer in the three-year period, gaining 9.6 per cent. It is also one of only three funds in the screen to post a 10-year track record; it had an annualized return of 9 per cent over this period.

Geof Marshall, one of two portfolio managers on the fund, says that real-estate investment trusts, high-dividend-paying stocks and high-yield bonds – his specialty – are important assets for the fund to hold to achieve its goals.

As the fund gets more inflows, Mr. Marshall said the greatest opportunities will come from the fund’s global assets, rather than its domestic holdings. While Canadian REITs have benefited from investment by “global government bond refugees,” as Mr. Marshall calls them, the CI Signature High Income fund will be looking for less-crowded trades in other countries.

“The rally in REITs and high-yield bonds generally is getting long in the tooth. Yields are getting skinnier,” he said.

At the moment, the fund is slowly pumping the brakes on its fixed-income investments as the U.S. Federal Reserve edges closer to backing off its asset-purchase program.

The portfolio currently consists of about 47 per cent equities and is weighted toward REITs, infrastructure-focused companies and financial companies.

He identifies Royal Dutch Shell and Singapore Telecommunications as two companies that might perform well for the fund in the future. He’s also keen on household names such as Kraft Foods Group Inc. and Coca-Cola Co.

Follow on Twitter: @j2nelson

 

Global neutral balanced funds, three years to July 31, 2013

Fund Ticker 1-yr
% rtn
(July 31)
3-yr
% rtn
(July 31)
CI Signature High Income 7.6% 9.6%
Templeton Global Income-T 17.3% 8.8%
Dynamic Global Asset Allocation 9.7% 8.5%
IA Clarington Global Tactical Income-A 13.5% 8.4%
CI Signature Global Income & Growth 16.3% 8.3%
Dynamic Strategic Yield 6.2% 7.8%
Dynamic Power Global Balanced Class 12.8% 7.6%
Lincluden Balanced-O 16.8% 7.4%
CI Signature Income & Growth 11.4% 7.2%
ING DIRECT Streetwise Balanced 11.1% 7.0%

Source: Lipper

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