The fund has been managed by IA Clarington’s
Jeff Sujitno since its launch in 2013. His approach is very simple and is best described
as “clipping coupons.” He looks for loans offering an attractive coupon
rate that are trading at a discount to par.
The investment process starts with a top-down macro analysis, which helps
Sujitno and his team understand the market trends, and risks, and helps set
up their outlook. Security selection is done using a fundamentally-driven,
bottom-up credit analysis that focuses on cash-flow generation,
sustainability of revenues, balance sheet strength, and quality of
The fund is typically 70% to 80% invested in floating rate debt, with the
balance in high-yield bonds and other asset backed securities. It is
well-diversified, holding between 100 and 125 securities. It invests mainly
in U.S.-traded issues, with a 62% exposure as of Feb. 28, and all currency
exposure is hedged.
Top holdings include the short-term loans and floating rate debt of
Ancestry.com, Virgin Media Bristol LLC, Delta 2 Lux Sarl, Staples Inc., and
Ziggo Secured Finance B.v.
Performance has been modest, gaining 2.8% for the three years ending Feb.
28, putting it right around the category average. However, with the
quality-focused, income-centric approach, volatility has been the lowest in
the category, with 3-year average standard deviation of 1.94%, resulting in
a leading risk-adjusted return. It’s not cheap, with an MER of 1.85% for
the advisor series. However, in a fee-based account, costs are a bit more
reasonable, coming in at 1.16% for the F series.
I like the space and I particularly like this fund. But be warned, this is not a money-market substitute, nor is it a replacement for
traditional fixed-income. Instead, it is best used as a piece of a
well-diversified portfolio to complement the more traditional asset classes
and to diversify risk in a portfolio.
IA Clarington Floating Rate Income Fund
IA Clarington Investments
Floating Rate Loan
Jeff Sujitno since November 2013
CCM9940 (Front-end load)
Fundata Fund Profiler, as at Feb. 28, 2018
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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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.