Last updated: Jan-21-2019

Mackenzie U.S. Mid Cap Growth Fund delivers strong risk-adjusted returns
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By Dave Paterson  | Wednesday, March 07, 2018


The Mackenzie U.S. Mid Cap Growth Class Series A is managed by a team headed by Phil Taller, and invests in a concentrated portfolio of well-managed, innovative companies believed to have above-average growth potential. Performance has been strong, with the fund posting a 5-year average annual compounded rate of return of 15.1% as of Jan. 31. To help generate these returns, the managers add an extra twist to their usual stock selection strategy.

The stock selection process is purely bottom up; however, the twist is that there is a macro overlay the managers use to help identify companies that they believe are well positioned to benefit from the broader secular trends. Some companies now in the portfolio are benefiting from such trends as increasing productivity growth, innovation in information technology, including cloud software, medical technology, and data.

Once they have identified a potential investment opportunity, the management team will do a more detailed fundamental review that involves balance sheet analysis and putting the financials through their proprietary valuation model. This helps them understand the true value of the company. This focus on valuation helps to avoid paying too much for the potential growth.

Once they decide to move forward with a stock, the weight in the portfolio is based on their conviction and the share valuation, with more attractively valued names holding a larger weight in the fund. The portfolio holds around 40 names, with the top 10 making up around 40%.

Top holdings recently included Internet software and services firm CoStar Group Inc. (NASDAQ: CSGP), packaged pet food products maker Blue Buffalo Pet Products Inc. (NASDAQ: BUFF), healthcare equipment maker DexCom Inc. (NASDAQ: DXCM), research and consulting services company Verisk Analytics Inc. (NASDAQ: VRSK), and luxury goods maker Carter’s Inc. (NYSE: CRI).

The portfolio looks much different than its benchmark, with overweights in industrials, financial services, and healthcare. The managers have also been reducing the cyclical exposure of the fund, so that it currently has no exposure to energy or materials.

Performance has been strong, with a 3-year average annual compounded rate of return of 8.5% as of Jan. 31, which has outpaced its peers. Volatility has been below average, with a 3-year average standard deviation of 11.1%, resulting in strong risk-adjusted returns.

For those looking for growth-focused U.S. small- and mid-cap exposure, this is a fund to consider.

Mackenzie U.S. Mid Cap Growth Class Series A
Fund company:
Mackenzie Investments
Fund type:
U.S. Small/Mid Cap Equity
FundGrade: B
Style: Mid-Cap Growth
Risk level: Medium / High
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Phil Taller since November 2002
MER: 2.54%
Fund code: MFC1564 (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

© 2018 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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