Managed Money Reporter Newsletter — Issue 188, October 2002


Editors: Carl Spiess & Allan McGlade


Featured Articles



Monitoring Your Fund Holdings 

In these difficult markets, we are constantly reviewing and reconsidering positions in our client's portfolios.  As part of that process, we meet with dozens of managers or review their written commentaries each month.  In the last month, we have held the following manager interviews, reviewed major fund holdings, learned of significant changes or spoken directly with management of the following funds: 

  • Jerry Javasky, Mackenzie Ivy Funds 
  • Alan Radlo, Fidelity Cdn Asset Allocation, Fidelity Cdn Growth Companies
  • Bob Haber, Chief Investment Officer, Fidelity Investments 
  • Clas Olsson, AIM Canadian Premier, AIM Global Theme 
  • Peter Chodos, Lawrence Enterprise Fund 
  • Bill Sterling, Chief Investment Officer, CI Global Advisors 
  • Dave Picton, Manager of Synergy Canadian Momentum and Style Management Funds
  • Michael Quinn, Manager, Bissett Canadian Balanced
  • Bill Kanko, Manager, Trimark Fund, Trimark Select Growth
  • Noah Blackstein, Manager, Dynamic Power American Growth Fund

Reviewed fund commentaries and holdings with management of: 

  • Elliott and Page Equity and Balanced Funds 
  • Templeton International Fund
  • Northwest Funds 
  • AIM/Trimark Funds

In addition, we subscribe to all the major daily email services and periodicals, which provide daily or weekly updates on industry trends, new investment products, and other areas that affect your investments.

1974 vs. 2002 - Click to EnlargeThe common theme that we have heard from each of the managers, is that there are many reasons to be optimistic. While there continue to be risks to global geo-political stability, on balance, there are many quality businesses that are now trading at discount prices worldwide. As can be seen in the attached graphic (click to enlarge), the magnitude and duration of the 1972-75 decline parallels the current situation, yet the economy was in much worse shape in the 1970s.  As always a balanced portfolio will produce the best compromise between reducing risk and providing the potential for growth.

We also attend general information events, like the recent speech Steve Forbes, former presidential candidate and editor of Forbes magazine, gave in Toronto.  Mr. Forbes shared his vision for the future of the global economy.  He was able to address some of the pressing concerns that Canadian investors have: the potential for a U.S. strike on Iraq, continuing corporate scandals and the slide in technology stocks.  You can expect that when you call us for a review of your portfolio and it's place in world events, we will have an opinion for you.

What this means to you:  Where the meetings or reviews have resulted in us changing a recommendation on a fund you hold, we have been in touch with you. Otherwise, rest assured, that despite the challenging markets, we continue to monitor your funds, and should we feel that there is an opportunity for improvement, we will be in touch with you.

Reviews and Meetings coming up next month:

  • AIC Advisor Forum with all AIC fund managers
  • Meetings with the major Labour Sponsored Investment Fund managers for the upcoming LSIF special issue.
  • Tax planning and compliance reviews
  • Review with management of Bissett Dividend Fund
  • and many more...

Please contact us at any time if you have any questions about how our ongoing reviews affect your portfolio.

Recommended Reading - This Time It Is Different?

We had a tremendous response to last month's recommended reading, Battling a Bear.  This month we present a very quick historical perspective, looking at market commentaries from 1857, 1932, 1962 and 1994.  We've called it "This Time It Is Different?".  We have also provided a copy of our MFR newsletter from 10 years ago, Issue 70.  In October 1992 the major concern was the outlook for Canada with the upcoming referendum.  Please take a look and draw your own conclusions, or contact us with your comments.

Fall Quarterly "Strategy" Now Online

We are pleased to note that our Fall edition of Strategy is available online for clients looking for a deeper review of market conditions.  See our Marketwatch page for more commentaries.

Canada Savings Bonds Season

For those with money sitting idle in a savings account, Canada Savings Bonds present an alternative to low daily interest savings rates. 

The premium bonds can be redeemed once a year on the anniversary date and during the 30 days thereafter.  They pay 2.5% the first year, increasing to 6% in year 5.  Note, that works out to annual compound rate of 4.06% if held for the 5 years.

The more liquid savings bonds, which are redeemable any time, pay 2%.  For more details visit
the Canada Savings Bond website.

Series 78 bonds are available for sale until November 1st.  With the Bank of Canada leaving rates unchanged for now, these rates won't make you feel quite as good as the music in the Canada Savings Bond TV commercial does.  But they can form a good foundation for the liquid part of your portfolio.  Please contact us if you would like a review of how CSBs may fit in your accounts.

Fund Profile - Fidelity Canadian Asset Allocation

In the volatile markets we have experienced of late, a balanced portfolio of equity funds and bonds can help reduce risk, but will need to be reviewed from time to time to ensure an appropriate balance.  An alternative to holding a variety of funds and bonds is to invest in a balanced or asset allocation fund.  Most balanced funds stay within a 60/40 40/60 split between stocks and bonds.  Asset allocation funds have a wider range, and depending on market conditions, will have very much higher or lower weightings.  In a sense, the asset allocation funds are as close as we would come to recommending market timing.

One of the top asset allocation funds in Canada over the last five years has been the very large and stable Fidelity Canadian Asset Allocation Fund.  View more fund information here, including a Fundmonitor report or contact us for more information on how this fund could fit into your portfolio.

Fund News - Fidelity Changes and StrategicNova / Dynamic Switches Now Available 

Alan Radlo, who has been with Fidelity for 17 years, runs the successful Fidelity Canadian Growth Company Fund and also handles the equity portion of the Fidelity Canadian Asset Allocation Fund, described above.  He continues with those mandates.  Radlo will be turning over the management of the Fidelity True North Fund to 12 year Fidelity veteran Stephen Binder.  Radlo will, however, be teaming with Joel Tillinghast, another Fidelity Veteran, to run a new international stock fund for Canadian investors.  The new fund, which will be known as the Fidelity NorthStar Fund, can invest in securities anywhere in the world.

As of Oct. 9, StrategicNova investors can switch into a limited selection of eight Dynamic funds, namely Dynamic Focus+ Diversified Income Trust, Dynamic Focus+ Balanced, Dynamic Value Fund of Canada, Dynamic American Value, Dynamic International Value, Dynamic Power Canadian Growth, Dynamic Power American Growth and Dynamic Power Balanced.  This is a result of Dynamic's recent acquisition of StrategicNova. The StrategicNova and Dynamic product lines aren't expected to be fully integrated until next summer. 

Please contact us if you have any questions about these funds or changes.

Mutual Fund Reporter Recommended Website of the Month 

One of the better fund sites out there is the fundlibrary. It provides fund ratings from Globefund, Morningstar, Gordon Pape, Funddata and then presents its own composite score, a truly unique feature.

Some of the best information on the fundlibrary site is contained in the searchable news and articles archive from a wide variety of writers.  Certainly there is no shortage of information available to investors.

http://www.fundlibrary.com

 



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T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

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