What are we looking for?
Biggest gainers among investment funds over the past year.
We looked at the one-year returns to Oct. 31 among all funds except those in categories such as alternative strategies and retail venture capital. U.S dollar, segregated and duplicate versions of the funds were also excluded.
What did we find?
A pair of sibling CI Cambridge funds at the top of the return heap.
CI Cambridge Canadian Growth Companies, which can invest up to 50 per cent in foreign stocks, surged 40.8 per cent, while CI Cambridge Pure Canadian Equity, which must be 90 per cent invested in Canada, climbed 33.3 per cent. Both are run by a team led by Brandon Snow, a portfolio manager with CI Investments Inc. (He and co-managers Greg Dean and Stephen Groff joined CI in early 2011 after leaving Fidelity Investments Canada.)
Their astute stock picks and ability to be nimble because of the small size of the funds have helped in trouncing relevant Canadian indexes. "There is also a pretty big overlap as far as the actual stocks in both portfolios," said Mr. Snow. "But the additional alpha generation [excess returns above the indexes in the growth fund] comes from going outside of Canada, and having more trading opportunities."
In both CI funds, winners among Canadian stocks included children's entertainment firm DHX Media Ltd., software provider Enghouse Systems Ltd. and hockey gear maker Bauer Performance Sports Ltd. The team also successfully played a recovery in natural gas prices through Tourmaline Oil Corp., Perpetual Energy Inc. and also Celtic Exploration Ltd., which is now being acquired by Exxon Mobil.
In the growth fund, the managers bet on a recovery in the U.S. housing market through names such as homebuilder PulteGroup Inc. and cement and drywall maker Eagle Materials Inc. Both stocks were sold after a sharp runup in their share prices. The fund still owns Stewart Information Services Corp., a provider of title insurance and Amerco Inc., owner of U-haul truck rentals.
"We really like companies where management is aligned with shareholders, have a competitive advantage, and ... are good stewards of capital," Mr. Snow said. "When growth is uncertain, volatile and unstable as it is today, it becomes more important for you to watch what management does with that capital."