Some time ago, I wrote a column about the decline of the Altamira funds. Back
in the 1990s, this group made itself synonymous with do-it-yourself investing
— all you had to do was pick up the phone and order. No sales commissions
and no hassles!
The business model worked very well until two things happened. First, the big
banks discovered they were missing out on a huge profit opportunity and began
aggressively marketing their own no-load funds. Second, Altamira’s managers
put too many eggs into the high-tech basket and we all know what happened there.
As the 2000-2002 bear market deepened, Altamira’s assets under management
began to melt away like snow in a spring rain. By mid-2006, they were less than
half what they had been six years earlier, at $3.7 billion. By that point, National
Bank had swooped in and purchased the firm. Since then, there has been a housecleaning
of managers and a change in the distribution system, although the funds are
still sold on a no-load basis.
For a time, it seemed as though it was all for nothing. Altamira was an old
story and investors had moved on. But with persistence and some good results,
National Bank is finally seeing some modest progress here. As of the end of
May, assets under managements were back over $4 billion, up 2.4 per cent from
the prior month.
Investors seeking no-load options might want to take another look at the line-up.
Here are three funds in particular that merit attention.
Altamira Global Discovery Fund: This has evolved into a respectable
emerging markets fund under the stewardship of Baillie Gifford, who took over
the portfolio in August 2002. Since then, the fund has generated double-direct
returns in every calendar year, topped by a 36.8 per cent advance in 2006. The
five-year average annual compound rate of return to May 31 was 25.8 per cent,
two percentage points above average for the category. Gifford takes a world
view and his portfolio is well-diversified geographically. The fund offers a
mix of large-cap stocks (e.g. Samsung, China Mobile) and companies you have
never heard of. Overall, this is a decent choice if you want an emerging markets
fund, although the 3.3 per cent MER is on the high side. As a general rule I
do not recommend emerging markets funds for registered plans because of their
volatility. Rating: $$$.
Altafund Investment Corp. As far as I can tell, this is a
unique fund. It focuses on western Canadian stocks and of course that part of
the country has been booming in recent years, particularly Alberta. That’s reflected
in the three-year average annual compound rate of return of 20.6 per cent (to
May 31) that this fund proudly boasts. As you might expect, energy stocks make
up the bulk of the assets at 48.2 per cent of the portfolio and the financials
weighting has been reduced to 15.2 per cent from almost 27 per cent a couple
of years ago. Although the focus is on the West, the mandate is broad enough
to allow manager Virginia Wei-Ping to include holdings from Eastern-based companies
like insurance giant Manulife Financial and Research in Motion. Because of the
high energy exposure, there is more volatility inherent in the portfolio than
in the average Canadian equity fund, but even during the 2000-2002 bear market
the losses were within a respectable range. Rating: $$$$.
Altamira Growth and Income Fund. Since Natcan’s management
team, led by Virginia Wei-Ping, took over this fund in mid-2002, it has enjoyed
a major renaissance. It scored gains for investors in every calendar year since
that time and is usually a first-quartile performer in the Canadian Equity Balanced
category. The fund currently leans towards stocks, with about two-thirds of
the portfolio invested in equities and the rest in bonds and cash. The equities
side of the portfolio is well-diversified with 19 per cent of the assets in
energy stocks, 15 per cent in materials, and 14 per cent in financials. The
fund boasts a five-year average annual compound rate of return of 13 per cent
(to May 31), well above the category average of 9.2 per cent. The latest 12-month
gain was 5.7 per cent compared to a loss of 1 per cent for the peer group. Although
the fund makes quarterly distributions, don’t rely on it if you need steady
cash flow. The latest payment, made on March 31, was only 4.33c per unit. The
company says that risk is on the high side for a fund of this type, but I have
not seen any real evidence of that so I give it a “medium” risk rating.
All-in-all, this has become a very good choice for balanced investors and the
fact it is no-load and has a low 1.64 per cent MER both add to its appeal. Rating:
Talk to a financial advisor to see if any of these are suitable for you.