Fund in Focus: Cambridge Global High Income Fund

Risk management, capital protection

Lead manager Bob Swanson has been running Cambridge Global High Income Fund, a Tactical Balanced fund of funds, since 2012. He assesses the macro outlook and then sets the asset mix accordingly, allocating the portfolio to other Cambridge-managed funds. Mr. Swanson has complete discretion on investment strategy and is not restricted by asset class or geography.

For equities, the managers invest in companies of any size that have defensive business models, a history of intelligent capital allocation, and a management team whose interests are aligned with the shareholders. The bottom-up approach is very active, and managers will use periods of rising volatility to better position the portfolio. The equity sleeve is cyclically positioned with an overweight to financial services.

The fixed-income sleeve is managed by Paul Marcogliese, who took the reins in January 2017. He invests mainly in Canadian bonds but can invest in foreign bonds as well.

Portfolio turnover has been modest, coming in at a recent 37%. The portfolio is defensively positioned with more than half invested in fixed income. The fund was also carrying about 8% in cash as of Feb. 29.

Increasing the fixed-income sleeve over the past couple of years while raising credit quality has acted as a cushion in periods of market volatility. However, the defensive positioning had been a headwind, as the fund lagged during market rallies. But the cushioning kicked in during the COVID-19 market panic, helping insulate the fund from the worst of the rout.

Looking out longer term, performance has been middle of the pack with a 5-year average annual compounded rate of return of 2.4%, pretty much matching the category average of 2.2% to Feb. 29. However, the manager has done an excellent job of managing risk, with standard deviation (volatility) of 4.4, well below the 6.1 median for the Tactical Balance peer group. Furthermore, the fund has done a solid job protecting capital in down markets, participating in less than 70% of the downside of the markets.

On balance, with its disciplined and repeatable investment process combined with a focus on capital preservation, this is a fund to consider for those shopping for an actively-managed balanced offering.

Cambridge Global High Income Fund
Fund company: CI Investments
Fund type: Tactical Balanced
FundGrade: B (February)
FundGrade A+ Award: 2013, 2016
Style: Tactical
Risk level: Low to Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: Bob Swanson since Dec. 2012, Paul Marcogliese since Jan. 2017
MER: 2.32%
Fund code: CIG6803 (Front-end load), CIG6823 (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.