Beutel Goodman Canadian is now a Top-40 fund

Best Canadian Mutual funds’ Beutel Goodman Canadian is now a Top-40 fund

Our new addition to our Top-40 funds possesses many of the characteristics we like: a strong performance track record, moderate volatility, an experienced management team and low expenses.

When we drop a fund from our monthly Mutual Fund Planning Guide, it’s not necessarily because we no longer longer like it. Sometimes we drop a fund because we’ve found another one we like better.

That’s the case with the change we’ve made to this issue’s Mutual Fund Planning Guide. We’ve dropped MACKENZIE CUNDILL CANADIAN SECURITY FUND (Fund codes: MFC1601(BE), MFC738(FE) and MFC3178(LL)) (see box this page) from the Planning Guide and replaced it with BEUTEL GOODMAN CANADIAN EQUITY FUND (Fund code: BTG770(FE)).

This fund is an offering of Beutel, Goodman & Company Ltd., a Canadian company founded in 1967 as a privately-owned investment management organization. The founding partners focused their efforts on value-oriented investments through internally-generated research.

Mutual Fund is more than 20 years old

In 1990, the firm launched Beutel Goodman Canadian Equity, which aims to increase capital over the long term through the application of its disciplined value investment approach, emphasizing capital preservation, and a focus on absolute return and risk. This is achieved through investment in a small number of securities issued by Canadian companies.

The mutual fund focuses on large companies that are leaders in their field and to a lesser extent, smaller companies that have the potential to be leaders. Every investment has to be significantly undervalued and have the ability to appreciate to “true value” within three years.

Beutel Goodman’s investment approach has produced strong results with this mutual fund. Since inception, the fund’s compound annual growth rate is 8.9 per cent. And over the past 10 years, its annualized return of 8.6 per cent ranks in the top quartile of the Canadian equity category. Of those 10 years, the fund performed in the top half of the category in six years.

Volatility is moderate for a fund of this sort.

As noted above, one of the mutual fund’s objectives is to preserve capital. And if the dark days of 2008 serve to illustrate a fund’s ability to do this, Beutel Goodman Canadian Equity did better than most of its peers. In that year, when the S&P/TSX Total Return Index suffered a loss of 33.0 per cent, Beutal Goodman lost 22.9 per cent, to rank in the top quartile of its category.

This mutual fund has many of the characteristics we like: a strong track record, moderate volatility, an experienced management team and a low management expense ratio of 1.38 per cent.

Fund performance and quartile rankings: 1-yr. — 21.7% — 1/4; 3-yr. — 8.8% — 1/4; 5-yr. — 15.8% — 1/4; 10-yr. — 8.5% — 1/4; Volatility: 6/10; MER: 1.38%; Min. initial investment: $5,000; www.beutelgoodman.com

Recommendation:

Beutel Goodman Canadian Equity is a buy for investors who have a medium risk tolerance and want long-term capital growth from a core Canadian equity fund.

 

 

We still like Mac Cundill

As we note on this page, we’ve removed Mac Cundill Canadian Security Fund from our Top-40 list. But we still find like the fund.

Over the past 10 years, the Cundill team’s deep-value investment approach has led this fund to perform in the top half of the Canadian focused equity category in seven years. But in recent years the fund has become more volatile. That’s why we now consider the fund an “Aggressive” offering, whereas before we rated it “Conservative”.

At the same time, the fund’s performance results are unremarkable when compared to the more conservative funds in our Guide. We, therefore, prefer these funds, and the new fund we’ve added to the Guide, over Mac Cundill Canadian Security. We still like the fund, but given its higher volatility, it’s a buy for investors who can accept a higher level of risk.

 

Canadian Mutual Fund Adviser, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846