Fund in Focus: EdgePoint Global Growth & Income Portfolio

FundGrade A+® Award winner

EdgePoint Global Growth & Income Portfolio is a global balanced offering from the highly-respected Edgepoint shop. This multi-year FundGrade A+® Award winner invests in equity and fixed-income securities of companies located anywhere in the world, and the management team led by Tye Bousada, Geoff MacDonald, and Ted Chisholm, have a high degree of flexibility in setting asset mix. Fixed-income weighting can range from as high as 60% to as low as 25%. At the end of October, the fund held about 31% in bonds.

The managers take a very long-term and patient approach, buying in at a price that is well below what they believe the security to be worth, based on the company’s prospects. The management team undertakes extensive due diligence, using a fundamentally-driven, bottom-up process.

They are not traditional value investors, so their view of a business is likely to differ from the market consensus, and they are not afraid to pay up for what they believe is a quality company with excellent long-term prospects. This helps explain why their valuation metrics appear to be higher than the index.

This approach results in a portfolio that tends to look much different than its benchmark or peer group. They are meaningfully overweight industrials and underweight real estate, energy, and telecommunication services. Top holdings at the end of September included Japanese cosmetics manufacturer Shiseido Co. Ltd. (TYO: 4911), U.S. railway operator CSX Corp. (NSD: CSX), Japanese transportation company Subaru Corp. (TYO: 7270), industrial equipment maker Flowserve Corp. (NYSE: FLS), and U.S. banker Wells Fargo & Co. (NYSE: WFC).

The fixed-income sleeve is focused on corporate bonds across the quality spectrum. On the fixed-income side, they can invest in both investment-grade and high-yield issues.

Performance has been excellent, with above-average returns in every year except 2010. As of Oct. 31, its 10-year average annual compounded rate of return was 10.2%, with an 8.4% annualized return over five years, handily outpacing the peer group. The fund’s volatility is higher than average, with a 3-year average standard deviation of 7.2, but the above-average returns more than offset this higher risk.

Despite its volatility, this is an excellent balanced fund for those who have an above-average risk appetite. If you’re comfortable with that and have a medium- to long-term time horizon, this is a great balanced fund to consider.

EdgePoint Global Growth & Income Portfolio
Fund company: EdgePoint Wealth Management
Fund type: Global Equity Balanced
FundGrade Rating: A (October)
Fundata FundGrade A+ Awards: 2014-2018
Style: Large-Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF Suitability: Good
Managers: Tye Bousada since Nov. 2008; Geoff MacDonald since Nov. 2008;
Ted Chisholm since May 2011
MER: 2.03% (Front-end load)
Fund code: EDG180 (Front-end load)
Minimum Investment: $20,000

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.