Western-based funds profit investors
If it isn’t happening on Bay Street, it isn’t happening. At least, that’s the view many Canadians have of the country’s mutual fund industry.
Well, they’re wrong! Here are two little-known western-base fund companies that are making nice profits for their happy investors. Both are well-suited to conservative investors in general and retirees in particular.
Mawer Investment Management. This Calgary-based company has been in business since 1974. The firm originally restricted itself to investment management for individuals, pension plans, and foundations, but in 1987 the company launched a family of no-load mutual funds, which has since grown to 10 in total.
Their investment style is a modified GARP. Normally, this acronym stands for “growth at a reasonable price”; however, the Mawer people prefer the phrase “growth at the right price.” The distinction, as they see it, is that their version employs a somewhat more conservative approach. The “right” price to a Mawer manager means a stock is trading at a discount to its intrinsic value.
This approach has served them well in the long bear market. Star performer has been thsmall-cap Mawer New Canada Fund, which showed a one-year return of 40 per cent for the year to Sept. 30 and a three-year average annual return of 17.3 per cent. The more broadly-based Mawer Canadian Equity Fund produced a small one-year profit of 2.7 percent, versus a loss of almost 10 per cent for the Canadian Large Cap category, and has gained more than 7 per cent annually over three years. The story is much the same for most other Mawer funds. In fact, seven of ten produced gains in the year to Sept. 30. Few companies come close to that batting average.
Mawer funds are registered for sale in all provinces. However, the minimum investment required will vary depending on where you live and from whom you buy your funds. Residents of Alberta and Saskatchewan can buy units directly from the company on a no load basis. In that case, there’s an initial minimum of $25,000 per account, although the company has the discretion to waive that requirement. Residents of other provinces can also buy direct from Mawer, but in their case, the minimum initial investment rises to $100,000. Alternatively, funds may be purchased through a licensed dealer, in which case the initial minimum is $5,000 per fund (note the distinction between “per fund” and “per account”). Although the funds are no-load, a dealer or broker may levy some kind of fee for his or her service.
Leith Wheeler Investment Counsel
Not all value-oriented funds have fared well in the bear market, but the results here are excellent. Four of their five funds made money in the year to Sept. 30. The lone exception, Leith Wheeler U.S. Equity, was down by less than a third of the average for its category. The Leith Wheeler Canadian Equity Fund was especially impressive, gaining 4.1 per cent for one year and averaging 7.9 per cent over three years, both figures well in excess of the category average of the benchmark S&P/TSX Total Return Index. It will receive a top $$$$ rating in my forthcoming 2003 Buyer’s Guide to Mutual Funds.
If you’re considering investing in these funds, I recommend you buy your units directly from the company on a no-load basis if you are a British Columbia resident. Although units are technically available through brokers and planners, they may be reluctant to acquire them for you because Leith Wheeler pays no trailer fees-they are one of the last holdouts in the industry. There is a toll-free number you can call to place an order: 1-888-292-1122.
Note that the minimum initial investment here is $50,000. It can be divided among several funds if you wish.
Adapted from an article that originally appeared in Mutual Funds Update, a monthly newsletter that provides guidance on fund selection and portfolio building for investors. For subscription information, go to: www.buildingwealth.ca/mfudemo.cfm