Fund in Focus: Mackenzie Canadian Growth Balanced Fund

FundGrade A+® Award winner

A couple years back, Mackenzie Investments made some changes to the way their balanced funds are managed. After the change, the top-level asset mix decisions were made by the Multi Asset Strategies Team, headed by Alain Bergeron. This change allowed the underlying portfolio managers to focus on what they do best – select securities. The wisdom of that strategy shows in the multi-year FundGrade A+ Award-winning Mackenzie Canadian Growth Balanced Fund.

For this top-rated balanced fund, the equity sleeve is managed by the team of Dina DeGeer and David Arpin who use a fundamentally-driven, bottom-up security selection process that looks to build a concentrated portfolio of 35-45 businesses. They look for well-managed niche players with unique competitive advantages, a history of strong free cash flow generation, and a growth rate that is faster than the economy and their peers. This has resulted in a growth-focused equity sleeve, which can be volatile.

The fixed-income sleeve is managed by a team headed by respected bond manager Steve Locke. They use a “core plus” approach that invests not only in Canadian investment-grade issuers but also in high-yield bonds, floating-rate loans, and other fixed-income instruments, using a blend of top-down macro analysis and bottom-up credit analysis.

At the end of July, the bond sleeve was overweight corporate bonds, with a very high average credit quality. More than 70% of the bond holdings were rated A or better, with the balance in higher yielding issues.

The asset mix for the overall portfolio is somewhat defensive at the moment, running approximately 62% in equity, 7% in cash, and 30% in bonds. The managers have some flexibility in setting the asset mix and can have between 60% and 90% of the fund invested in equities at any time.

Historically, this fund has produced excellent long-term performance, and I don’t see that changing. Its 3-year average annual compounded rate of return to July 30 was 8.1%, compared with the category average of 6.0%, while the 5-year annualized return was 9.3% compared with the category average of 3.6%. In the near term, though, it may be susceptible to higher volatility and may see a modest underperformance.

More conservative investors may want to look elsewhere given the potential for higher volatility that comes from a higher equity weight.

Mackenzie Canadian Growth Balanced Fund
Fund company: Mackenzie Investments
Fund type: Canadian Equity Balanced
FundGrade: A (July)
FundGrade A+ Awards: 2015-2018
Style: Top-down/Bottom-up
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Dina DeGeer (since Nov. 1996), David Arpin (since Nov. 2012), Steve Locke (since Jan. 2010), Alain Bergeron (since Aug. 2014)
MER: 2.29%
Fund code: MFC 724 (Front-end load)
Minimum investment: $500

Dave Paterson, CFA, is a money manager and an expert on investment fund research and due diligence on a variety of investment products.

Notes and Disclaimer

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.