Those investors looking for a stable source of tax-efficient monthly income
with the potential for some capital growth may want to consider the
Leith Wheeler Income Advantage Fund. Over the past five-years, the no load units of this fund have generated
an average annual compounded rate of return of nearly 6.3%, placing it in
first-quartile performance, and handily outpacing both the index and its
Canadian Fixed Income Balanced peer group. The fund achieved a
FundGrade A Grade in November, and won a FundGrade A+® Award
The fund invests in a mix of bonds, preferred shares, and dividend-paying
stocks. It has a lot of flexibility and can invest in companies of any
size. It also has the flexibility to explore opportunities outside of
Canada. Allocations are quite flexible, with managers able to adjust
fixed-income holdings anywhere between 30% and 70% of the portfolio,
Canadian equities between 15% and 50%, foreign equities up to 25%,
preferred shares up to 25%, mortgages up to 10%, and cash and cash
equivalents up to 5%.
The fund is generally a more conservative option, and managers will
typically favour fixed-income investments. According to the fund’s most
recent fact sheet dated Sept. 30, 2017, it held 55% in bonds, 8% in
preferreds, 2% in cash, and the balance in equities. The majority of the
equity exposure will be through holding units of the highly-regarded Leith Wheeler Canadian Dividend Fund Series A, which uses
a fundamental, bottom-up, value-focused approach to find higher-yielding
dividend stocks. Foreign exposure of the fund is limited to a maximum 25%,
although given the focus on tax-advantaged income, most of the equity
exposure is likely to be Canadian.
The fixed-income sleeve will be a mix of investment grade and high yield.
At the end of November, about 58% of the fixed-income holdings were rated A
or better, while high yield represented approximately 38%.
The drawback to this fund is that it has been slightly more volatile than
the peer group over the past 3- and 5-year periods. Even with the higher
volatility, however, the fund has outpaced its competition on a
Bottom line, this can be a great balanced fund for those looking for a good
mix of tax-advantaged returns and capital gains.
Leith Wheeler Income Advantage Fund
Leith Wheeler Investment Counsel
Canadian Fixed Income Balanced
FundGrade A+ Award:
Low to Medium
Leith Wheeler Investment Team
LWF017 (no 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
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before investing. Mutual funds are not guaranteed and are not covered by
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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.