Last month we purchased Fidelity Limited Term Bond (FJRLX) in our model portfolio. Part of our strat...
Spread Out a Basket of Canadian Stocks
04/25/2013 9:00 am EST
This fund holds a wide variety of Canadian companies—a great way to add diversification to your portfolio—says John Deman of the Money Reporter.
Mackenzie Saxon Stock Fund (Toronto: MFC 4151) is one of our Recommended Mutual Funds.
Because there are quite a few variations of this fund, to be specific, we're referring to the Series SI version, fund code MFC 4151(FE), with a recent NAV of $38.12 (many of the other variations have a NAV in the $9 to $13 range).
This fund has a Management Expense Ratio (MER) of 2.07%. That partly contributes to it having the second-lowest one-year MER coverage right now among the five funds we monitor in this category.
As a reminder, one-year MER coverage measures by what multiple the fund's one-year return exceeds the fund's MER. Over the past 12 months, this Mac Saxon fund has returned 9.02% (the second highest among the five funds we follow in this category), which is 4.4 times the 2.07% MER that it charges.
Thus, its one-year MER coverage is 4.4 times. It has the second-highest return over the past year, but it has the second-lowest MER coverage. So let's look to the longer term.
Its recent three-year and ten-year MER coverages are third-highest in the group, and the fund's return is third-highest over three years, and fourth-highest over ten years. So it's about average on the expensiveness scale—not excessive.
The main investment objective of this fund is straightforward: To generate significant long-term capital growth by investing primarily in a well-diversified portfolio of Canadian equities.
The strategy is generally to invest from 50% to 100% of its assets in equity securities of Canadian companies. The fund may, however, invest a lesser percentage of its assets in these securities when the portfolio manager believes it would be beneficial to do so.
The top holding is Royal Bank (RY), at 3.82% of the fund, but the next five largest holdings are TD Bank (TD), Suncor Energy (SU), Telus (TU), TransCanada (TRP), and Teck Resources (TCK), which combined account for another 16.78% of the fund.
The portfolio manager obviously likes some of the stocks that we follow, and the fund also provides some diversification away from our own list of recommended common shares.
In terms of nuts and bolts, this fund has been around since December 1985 and has $206 million in assets. It is Registered Retirement Savings Plan (RRSP) eligible, charges a front-end load, has an MER of 2.07%, and currently ranks 91st among 406 peers in terms of overall performance.
Its ten-year compound return of 8.4% is second-quartile; its five-year compound return of 2.3% is first-quartile; and its three-year compound return of 4.4% is also first-quartile. If you want to expand your holdings of Canadian equities a little beyond our recommended stocks list, this is a great fund to accomplish that while still largely complementing your existing portfolio.
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