Our latest addition to our Top-40 list of best Canadian mutual funds has a solid track record of delivering strong risk-adjusted returns. At the same time it has a well-balanced portfolio that makes it well suited to you if you want a very conservative Canadian equity fund.
We’ve added Fidelity True North Fund Series B (Fund code: FID225 (FE)) to our Mutual Fund Planning Guide which highlights the 40 Canadian mutual funds we see as your best choices for long-term investment.
Fidelity True North aims to achieve long-term capital growth by investing primarily in Canadian companies. The fund may invest in small, medium and large companies, though its focus is primarily on large- and mid-cap companies.
When buying and selling securities for this blended growth/value fund, the portfolio manager examines each company’s success in light of its current financial condition. The manager considers factors like growth potential, earnings estimates and quality of management.
Top quartile in Canadian mutual funds performance
One thing we like about True North is the strong risk-adjusted returns it has delivered over the short and long term. These past 10 years, for example, the fund’s compound annual growth rate is 8.2 per cent. This performance ranks the fund in the top quartile of all Canadian equity funds. It also beats the return of the fund’s benchmark index, the S&P/TSX Composite Total Return Index, which realized an annualized return of 7.7 per cent over the same period.
True North has performed in the top quartile of the category in each of the past one-, three- and five-years periods as well. In each of those periods, it has also outperformed the benchmark.
The fund’s most recent manager is Maxime Lemieux. Mr. Lemieux joined Fidelity in 1996, rising to the position of analyst in 1998. From 2000 onward, he has managed a number of Fidelity funds, taking the helm of True North in late 2009. Under Mr. Lemieux, the fund has a strong five-year track record. Over this time, the fund’s annualized return of 13.8 per cent ranks in the top quartile, and easily beats the benchmark return of 8.9 per cent.
Low volatility rating for a Canadian equity fund
The fund has achieved its strong returns while incurring little volatility. On a scale of one to 10, its volatility rating of three is well below those of most Canadian equity funds. That makes the fund suitable for very conservative investors, in our view.
In achieving its strong risk-adjusted returns, True North certainly does not take its cue from its benchmark. In contrast to the S&P/TSX, which is top-heavy with financial and resource stocks, the fund’s portfolio is well balanced among industry sectors. Compared to the benchmark, the fund is underweighted in the financial (21% of the portfolio) and energy (15%) sectors. Meanwhile, it’s overweighted in industrial (13%), consumer (22%) and technology (12%) stocks.
We like True North, then, because of its top-rate track record of delivering strong risk-adjusted returns and its well-balanced portfolio of mostly conservative Canadian equities.
Fidelity True North is a buy if you want a diversified, core Canadian equity fund and you can tolerate low to medium investment risk.
Canadian Mutual Fund Adviser , MPL Communications Inc.
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