Fund in Focus: Mackenzie Ivy Canadian Fund

Defensive positioning helps protect capital

Over the years, I have come to equate Mackenzie’s Ivy brand with capital preservation and downside protection. As the bull market ages, we will likely see periods of higher-than-normal volatility and selloffs, much like we saw in August. In those types of environments, a focus on quality and downside protection become increasingly important, and the venerable Mackenzie Ivy Canadian Fund (inception Oct. 13, 1992) is one of the stronger picks for that reason.

Historically, the fund has been significantly less volatile than the broader markets, with a standard deviation that is between 15% and 20% lower than the S&P/TSX Composite Index. It has also done an excellent job protecting capital, participating in only 50% to 60% of the market downside.

If there is a criticism, it is that the fund may be too conservatively positioned, which leaves a lot of potential return on the table. Over the past five years, it has delivered roughly 70% of the market upside.

The portfolio holds industry leaders in both Canadian and global companies and is concentrated at between 35 and 40 names. The managers’ investment process is fundamentally-driven, bottom-up that looks for well-managed, high-quality companies trading below what the managers believe them to be worth. The process is very much benchmark agnostic and results in a portfolio that is much different than the index.

Top 10 holdings as of Aug. 31 constituted 40.7% of the fund’s assets and included Brookfield Asset Management Inc. (TSX: BAM.A), Pembina Pipeline Corp. (TSX: PPL), Dollarama Inc. (TSX: DOL), Onex Corp. (TSX: ONEX), and Shaw Communications Inc. (TSX: SJR.B).

At Aug. 31, the portfolio was defensively positioned with overweight allocations in financials and consumer staples. Over 9% was allocated to cash. The fund is underweight utilities, information technology, and real estate.

Longer-term absolute performance numbers have been in the middle of the pack, and the fund has lagged both benchmark and category average year to date. This is not a fund I would ever expect to “shoot the lights out.” But if you’re a bit more conservative and are looking for a relatively steady ride in a Canadian-focused equity fund, I believe this is definitely one to consider.

Mackenzie Ivy Canadian Fund
Fund company: Mackenzie Investments
Fund type: Canadian Focused Equity
FundGrade: C (August)
Style: Large-Cap Blend
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Paul Musson since January 2009; Graham Meagher since Oct 2015; James Morrison since April 2016
MER: 2.46%
Fund code: MFC083 (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.