Skip to main content

Market Analyze

kai zhang/Getty Images/iStockphoto

What are we looking for?

Low interest rates over the past few years have driven yield-craving investors toward Canadian dividend and income equity funds. Which funds fared the best in the past year?

The screen

Story continues below advertisement

We looked for the best performers in the asset class for the year ended March 31. U.S. dollar, segregated and duplicate versions of the funds were excluded.

What did we find?

In an asset class that has seen positive fund flows and benefited from relatively strong markets, all the funds in the screen beat the S&P/TSX Total Return index by a healthy margin.

The Trimark Canadian Plus Dividend Class posted the strongest return, with an annualized gain of 22.3 per cent. The fund has 70 per cent of its holdings in Canada, 14 per cent in the U.S. and the rest spread internationally.

A contrarian attitude has helped the Trimark fund's performance. "We've been more or less fully invested over the past few years, so where some people were running scared of the market, we saw opportunities and took advantage of them," said Rory Ronan, vice-president of Trimark Investments and one of the fund's three managers.

While Canadian dividend and income equity funds do get some of their returns by way of dividends or distributions, they also tend to move with the stock market. But Mr. Ronan said he's more concerned with individual stocks than the macro picture.

"Paying attention to the balance sheet and valuations – that makes sure you protect the downside," he said.

The strategy paid off when the fund heavily weighted Progress Energy Resources Corp. before it was bought by the Malaysian state-owned energy company Petronas. A year ago, amid low gas prices, Progress's valuation was discounted and Mr. Ronan and his team thought the time was right to invest.

Other companies such as U.S.-based media and tech company Comcast Corp., and paper and lumber company West Fraser Timber Co. Ltd., both helped boost the fund's performance.

Looking ahead, the firm is sharpening its pencils and looking closely at resource stocks in Canada. The sector has struggled in the past couple of years but Mr. Ronan said he has started to see more opportunities in the resource space.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Discussion loading ...

Cannabis pro newsletter