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Growth tilt pays off for Trimark U.S. Companies Fund
11/21/2017 10:40:25 AM
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By Dave Paterson  | Wednesday, May 17, 2017


 

Like other funds in Invesco’s Trimark lineup, the Trimark U.S. Companies Fund is fairly concentrated, holding around 40 names, with a sector mix that is much different than its benchmark. At the end of March, the fund was overweight in technology and healthcare, which has given the portfolio a bit of a growth tilt, and has pushed valuation levels above those of the index.

The fund has been managed by Jim Young since October 1999, a fairly long tenure in this business. Young uses Trimark’s fundamentally-driven, quality-focused, bottom-up approach to picking stocks. He aims to find what he believes are well managed, high-quality companies that have a distinct proprietary advantage, are industry leaders, and are trading at a level that is below what he believes is their true worth.

Top holdings at April 30 included insurer Chubb Ltd. (NYSE: CB), bank PNC Financial Services Group Inc. (NYSE: PNC), biotech firm Celgene Corp. (NYSE: CELG), home improvement retailer Lowe’s Cos. Inc. (NYSE: LOW), and medical device maker Stryker Corp. (NYSE: SYK).

Part of the reason for the fund’s higher valuation levels is that Young is willing to “pay up” for quality and growth potential. This growth tilt has paid off for the fund in the three months ended April 30, as investors rotated back into growth names. The fund gained a first-quartile 13.2%, handily outpacing both the S&P 500 with a 10.4% return and the Global Equity peer group at 8.8%.

Looking ahead, one of the trends the manager sees evolving over the next few quarters is the accelerating rate of change that is beginning to undermine many business models. He is looking to find companies that are embracing, and in many cases driving, these changes.

One worry I have with this strategy is that in a rapidly changing environment, there are often few winners and many losers, so there is little room for error, particularly in a portfolio as concentrated as Trimark U.S. Companies Fund’s is. However, if Young is able to identify the winners, the impact to the portfolio can be substantial.

As with most U.S. equity funds, I don’t expect this fund to outpace the index, particularly over the long-term. But the concentrated portfolio gives Trimark U.S. Companies Fund the potential to outperform over shorter periods of time.

Trimark U.S. Companies Fund
Fund company:
Invesco Canada Ltd.
Fund type:
Global Equity
FundGrade™ Rating: C (April)
Style: Large Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Jim Young since October 1999
MER: 2.79%
Fund code: AIM1743 (Front-end load)
Minimum investment: $500

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 of 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.

 
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