Fund in Focus: IA Clarington Global Allocation Fund

First-quartile performance in market meltdown

Managed by Loomis Sayles, IA Clarington Global Allocation Fund has been one of the strongest performers in the category in the past month, with a 1-month loss of 5.4% in March compared with an average 10% loss for the category during the March market meltdown. And in the 3-year period ending March 31, the fund has managed a 5.8% average annual compounded rate of return compared with a negative return of 0.22 for the category. For the 12 months ending March 31, the Series A units posted a gain of 0.8%, 3.6%, handily outpacing the benchmark and peer group.

The investment process is very opportunistic, with a long-term horizon of seven to 10 years, giving managers the ability to invest anywhere in the world. The asset mix is determined by the available opportunity set, and equity has historically ranged between 35% and 60% of the portfolio.

The equity sleeve, headed by Eileen Riley and Lee Rosenbaum, is managed using a fundamentally-driven, bottom-up, benchmark-agnostic approach, as managers seek high-quality companies trading below what they believe the company to be worth.

On the fixed-income side, managers Daniel Fuss and David Rolley have a wide mandate across the fixed-income spectrum, with an investment process that is very much a blend of top-down macro analysis and bottom-up security selection.

The top-down analysis helps the team find the most attractive opportunities anywhere across the quality curve. It has tended to focus more in the AA to BB range, looking for credits that are attractively priced and that can add potential return.

At an average 3-year standard deviation of 8.6 at the end of March, overall volatility is lower than the 9.6 average posted by the overall peer group, while the fund has delivered better-than-average returns, consistently placing in the first quartile of performance rankings. And the managers have also done a good job at protecting capital in down markets.

With its recent performance validating the fund’s, deep management bench strength, and disciplined investment process, the fund is a solid global balanced offering that could potentially be a cornerstone of an otherwise well diversified portfolio.

IA Clarington Global Allocation Fund
Fund company: IA Clarington Investments
Fund type: Global Equity Balanced
Rating: B (March)
Style: Active
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Dan Fuss since February 2015; Eileen Riley since February 2015
MER: 2.39%
Fund codes: CCM2470 (Front-end load); CCM2471 (Low-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. Dave Paterson is employed as an advising representative (portfolio manager) by Empire Life Investments Inc. (ELII), a subsidiary of Empire Life Insurance Company. ELII is the investment fund manager and portfolio manager of the Empire Life Mutual Funds and the portfolio manager of the Empire Life Segregated Funds (collectively, the Empire Funds). As such, his employment and his compensation may be connected to the success of ELII and the Empire Funds. From time to time, the Empire Funds may buy, sell, hold, or otherwise have an interest in securities that may be discussed in this report.