Fund in Focus: Manulife Dividend Income Plus Fund

FundGrade A+® Award winner

Managed by Prakash Chaudhari, Saurabh Moudgil, and Jonathan Popper, the Manulife Dividend Income Plus Fund has won the prestigious annual FundGrade A+ Award for 2019, its second consecutive win.

This all-cap fund uses a unique multi-step approach that looks to fully understand the value of a business. The managers score each company on several factors, e.g., stability and level of earnings power, managerial skill and ownership, and financial leverage, helping to determine an estimate of fair value. This helps to determine buy and sell prices. A deeper due diligence review is conducted on the most attractive opportunities, including meetings with management.

With a view to significant diversification across business risk and return drivers, their methodology results in sector weightings that are significantly more balanced than the S&P/TSX Composite Index, which is overweight energy and financials. The managers actively monitor position sizes and make trades if they believe a holding has become over- or undervalued.

The portfolio consists of roughly 60 holdings, with top equity names as of Dec. 31 including Constellation Software Inc. (4.6% of assets), Alimentation Couche-Tard Inc. (3.3%), MTY Food Group Inc. (3.1%), Canadian Pacific Railway Co. (3.0%), and Brookfield Asset Management Inc. (2.8%). The fund was recently overweight consumer discretionary and information technology names, and significantly underweight energy, real estate, and utilities.

As at Dec. 31, the fund was 64% invested in Canadian equity, 23% in U.S. equity, 12% in international equities, and the balance in cash and other assets.

Despite recent volatility, long- and short-term performance has been excellent. As of Dec. 31, it delivered a trailing one-year return of 15.4% and boasts a 5-year average annual compounded rate of return of 7.8% compared with 5.0% for the category average.

Though the fund has been more volatile than the index, with a 3-year average standard deviation of 12.9% as of Dec. 31, it has done a great job protecting capital in down markets. Over the most recent trailing 5-year period, it has captured roughly 101% of the market upside, while capturing only 57% of the downside.

Although I still lean towards its sister Manulife Dividend Income Fund, this one is a good option and can be a great core holding for investors with an above-average tolerance for risk.

Manulife Dividend Income Plus Fund
Fund company: Manulife Investments
Fund type: Canadian Focused Equity
FundGrade Rating: A (December)
FundGrade A+ Awards: 2019, 2018
Style: Mid-Cap Growth
Risk level: Medium-High
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Prakash Chaudhari, Saurabh Moudgil, and Jonathan Popper
MER: 2.30%
Fund Code: MMF4548 (Advisor series)
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.