The fund invests in companies of any size, and at the end of January had
about 25% invested in large caps, 28% in mid-caps, and the balance in small
cap names. Approximately 30% was invested in non-Canadian companies.
As of March 31, top holdings included
Detour Gold Corp. (TSX: DGC),
Wesdome Gold Mines Ltd. (TSX: WDO),
Newmont Mining Corp. (NYSE: NEM),
Barrick Gold Corp. (TSX: ABX), and
RandGold Resources Ltd. (NASDAQ: GOLD).
While the fund can invest in firms involved in silver, platinum, and
palladium, the focus is on gold companies, which make up 80% of the fund.
The managers use a unique approach to resource investing and focus a lot of
attention on finding companies that have the ability to generate higher
levels of sustainable free cash flow. They dig deep to gain an
understanding of a company’s true capital expenditure levels, which then
allows them to more effectively forecast the free cash flow the company can
potentially generate. They also look for quality management who have a
strong history of sound capital allocation.
The fund had a heck of a run in the first half of last year, but with the
U.S. Federal Reserve looking to raise rates this year, it looks like
inflation will remain subdued. This has dampened enthusiasm for bullion
somewhat, and there has been a modest selloff in the past six months, with
the fund falling -11% to the end of March.
Short-term performance has been strong, with 1-year return of 29.1% as of
March 31, and 3-year average annual compounded return of 10.8%. Longer
term, the fund is still suffering from the effects of the decline in the
price of gold through 2011-15, and shows a 3-year average annual compounded
rate of return of -5.2%.
Even with the managers’ unique approach, most the fund’s return will be
driven by the price of gold and other precious metals. Predicting the
direction of any commodity is challenging. However, for those looking for
an actively managed portfolio of gold companies, this is a decent pick. Be
warned, though, like all precious metals funds, it is volatile, matching
the category’s 3-year annualized standard deviation of 41.6. It should be
used only as a smaller piece of an otherwise well diversified portfolio.
Mackenzie Precious Metals Class
Precious Metals Equity
Benoit Gervais, Onno Rutten
MFC1192 (Front-end load)
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
Notes and Disclaimer
© 2017 by Fund Library. All rights reserved. Reproduction in whole or in
part by any means without prior written permission is prohibited.
Commissions, trailing commissions, management fees and expenses all may be
associated with fund investments. Please read the simplified prospectus
before investing. Mutual funds are not guaranteed and are not covered by
the Canada Deposit Insurance Corporation or by any other government deposit
insurer. There can be no assurances that the fund will be able to maintain
its net asset value per security at a constant amount or that the full
amount of your investment in the fund will be returned to you. Fund values
change frequently and past performance may not be repeated. No guarantee of
performance is made or implied. This article is for information purposes
only and is not intended as personalized investment advice.