Hartford becomes Castlerock

When the Hartford funds were sold to CI Financial in December, it was only a matter of time before they were rebranded. Clearly, CI wasn’t planning to go forward with a line-up that bore the name of a big U.S. insurance company.

The only question was whether the group would remain intact or the funds would be distributed among existing CI brands such as Signature, Synergy, and Harbour. That was answered in mid-February when CI announced the funds would remain as a unit under the new name “Castlerock”. In-house Hartford managers have been replaced by CI’s people but two key outside advisors, Black Creek Investment Management and Greystone Managed Investments, were retained.

The Hartford funds always seemed to operate under the radar of most investors. Despite some strong entries, the company was never able to generate a great deal of sales traction. Now that the funds are part of the much higher profile CI organization (albeit still operating under a separate corporate structure), I expect more investors and financial advisors will take a closer look.

Shortly after the news was announced, I undertook a full review of the Hartford/Castlerock line-up and picked out the ones that I feel should be at the top of your list if you are considering adding to your portfolio. Here are two that are worth a look; ask your financial advisor if they are right for you.

Castlerock Canadian Balanced Fund. This fund was launched in May 2000 just as the first of the two bear markets of this century was gathering steam so it stumbled out of the starting gate, recording losses in its first two years. But since then it’s been mostly good news for investors. Of course, the fund was hit again in the crash of 2008-09 but despite this the 10-year average annual compound rate of return for the B units to Feb. 28 was a respectable 4.8 per cent, better than the category average. The latest one-year gain was 12.7 per cent.

The portfolio is in the capable hands of Regina-based Greystone Managed Investments, a well-respected firm that takes a conservative approach to money management. The equity side of the portfolio (almost 60 per cent of total assets entering 2011) focuses on large-cap stocks such as the banks, Teck Resources, Goldcorp, and Potash Corp. Bonds account for just over 27 per cent of the portfolio, with the rest in cash. Risk is slightly higher than normal for a balanced fund. Rating: $$$.

Castlerock Canadian Dividend Growth Fund. This fund focuses on Canadian dividend-paying stocks with above-average growth potential. It has been on a strong run recently thanks to the foresight of the Greystone management team which invested heavily in income trusts that were about to convert to corporations. During 2009-10, many of these trusts were seriously undervalued including such names as Keyera Facilities, Vermilion Energy, Crescent Point Energy, and Pembina Pipeline. As investors discovered these bargains, prices shot up, in some cases by more than 50 per cent.

These gains propelled the fund to a profit of 22.8 per cent in the year to Feb. 28 (B units), more than six percentage points above the category average. The strong results pulled up the five-year average annual compound rate of return to 4.7 per cent, again much better than the peer group norm.

The fund pays quarterly income distributions (usually very small) plus a year-end capital gains payout. Even with that, cash flow is minimal so don’t put too much credence in the word “dividend” in the fund’s name. This is mainly a capital gains play. Rating: $$$.

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