Fund in Focus: Mackenzie Canadian Growth Balanced Fund
FundGrade A+® Award winner
Mackenzie Canadian Growth Balanced Fund is a growth-focused balanced offering that has had a very solid 12 months, gaining more than 6.9% to the end of August, outpacing the category average of 2.0%. It boasts top-quartile performance in every period for the past 10 years, which accounts for its current monthly FundGrade of A and its five-year string of FundGrade A+ Awards. I last reviewed this fund in September 2019, and since then, it has continued delivering on its mandate right through the pandemic meltdown, posting a 6-month return of 7.6% to Aug. 31, and a year-to-date return of 6.1%, compared with the category average of -1.0%. That’s consistency!
The fund is run like a fund of funds, with the top asset mix being determined by Mackenzie’s Multi-Asset Strategies Team, headed by Nelson Arruda, who last year took over from Alain Bergeron, who has since moved to iA Financial Group. There’s a bit of flexibility, with equity exposure expected to range between 60% and 90%.
The equity sleeve looks very much like the Mackenzie Canadian Growth Fund. Veteran bond manager Steve Locke leads the fixed-income team. His “core plus” approach uses not only Canadian investment-grade issuers but also high-yield bonds, floating-rate loans, and other fixed-income instruments, using a blend of top-down macro analysis and bottom-up credit analysis.
At the end of August, the fund had 32% in fixed income, 35% Canadian equity, 6% in U.S. equity, 5% in international equity, and the balance in cash. The bond portfolio was split roughly evenly between corporate and government bonds. Credit quality was high, with only a small exposure to high-yield debt.
With its slight growth tilt, the equity portfolio was overweight financials, information technology, industrials, and consumer staples as of July 31. It was underweight consumer discretionary, real estate, and materials.
Longer-term performance has been excellent, with a 5-year average annual compounded rate of return of 7.9% to Aug. 31, handily outpacing the benchmark and peer group. Volatility is below the peer group, with a 3-year average standard deviation of 9.7, compared with the category median of 10.7, and the fund has a good record of protecting capital.
Over the long-term, the fund has the potential to deliver above-average returns, but also with above-average levels of volatility, given the growth tilt of the equity sleeve. So only those with an above-average risk tolerance will want to consider this fund. More conservative investors may want to look elsewhere.
Mackenzie Canadian Growth Balanced Fund
Fund company: Mackenzie Investments
Fund type: Canadian Equity Balanced
FundGrade A+ Awards: 2015-2018
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Good
Managers: Dina DeGeer, David Arpin, Steve Locke, Nelson Arruda
MER: 2.29% (Series A)
Fund codes: MFC724 (Front-End load); MFC3197 (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.
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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. 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.