Fund in Focus: Dynamic Global Dividend Fund

02-05-2020
Fund in Focus: Dynamic Global Dividend Fund

FundGrade A+® Award winner

 

FundGrade A+ 2019 Award-winner Dynamic Global Dividend Fund targets a concentrated portfolio of high-quality, dividend-paying stocks that are trading at a price below what manager David Fingold believes them to be worth.

Using a fundamentally-driven, bottom-up process, Fingold’s approach is benchmark-agnostic, focusing on companies he believes can generate above-average returns over the next three years. This is a dividend fund, but in fact it emphasizes the total return rather than just the yield. While security selection is based on bottom-up research, Fingold also looks for positive industry fundamentals in an effort to avoid sectoral headwinds.

As of Dec. 31, top holdings included JPMorgan Chase Co., Microsoft Corp., Hoya Corp., NIKE Inc., and Bank of America Corp.

Sector mix and geographic exposure are dependent on the security selection process. However, the fund tends to run with an overweight exposure to the U.S., with 54% invested in the U.S. at the end of December. Information technology constituted 24% of asset allocation, while industrials and financials represented about 16% each.

The fund’s performance has been excellent, with top-quartile returns over the past one-, three-, five-, and 10-year periods. For 2019, the fund returned 24%, compared with the category average of 20%, while the 5-year average annual compounded rate of return to Dec. 31 was 14% compared with 8% for the category. Volatility has been roughly in line with the index and the broader market, resulting in better-than-average risk-adjusted returns.

The fund outperformed in rising markets, with upside capture ratios of more than 100% for the past three- and five-year periods. Downside capture has been roughly in line with the index, suggesting performance comparable to the index in declining markets. This marks a change from a few years ago, when the fund was well known for its strong downside protection.

Fortunately, what it has lost in downside protection has been more than offset through stronger upside, much of which has come from the manager’s positioning the portfolio towards growth-type stocks. The portfolio is significantly overweight in information technology, which makes up nearly a quarter of the fund. The manager is very active, with a portfolio turnover ratio averaging about 140% over the past five years.

Costs are slightly below average with an MER of 2.24% for the advisor-sold units and 1.1% for fee-based units. Those looking for a strong total return profile may find this to be a fund to consider as a core global equity fund. While it is a dividend fund, it does not pay a regular distribution, so it would not be suitable for those looking for a regular cash flow.

Dynamic Global Dividend Fund
Fund company:
Dynamic Funds
Fund type: Global Equity
FundGrade: A (December 2019)
FundGrade A+ Awards: 2017-2019
Style: Large-Cap Growth
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Manager: David Fingold since March 2006
MER: 2.24%
Fund code: DYN031 (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.

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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.