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Investment Objective The objective of this fund is to provide long-term capital appreciation through a portfolio of U.S. equities that is sufficiently diversified to minimize risk. Fund Details • Fund Inception: October 1, 1998
*Pursuant to securities legislation the fund cannot disclose performance returns prior to the date it commenced offering its units to the public by way of a prospectus. Barrow, Hanley, Mewhinney & Strauss - Value Manager Barrow Hanley’s expertise is managing large-cap equities through a value-oriented research intensive process of identifying securities that are temporarily undervalued. The S&P 500 fell almost 9% (CAD$) during the quarter as the financial crisis worsened and commodities sold off. The energy sector fell 27% as oil prices declined sharply and the materials sector fell 24% as a global slowdown looked more likely. Despite the large weighting of financial stocks within value indices, value stocks, as measured by the Russell 1000 Value Index, outperformed growth stocks during the third quarter. Stock selection and relative weighting in Energy, particularly Duke Energy (DUK), added to the performance of the portfolio for the quarter. The largest detractor for the quarter was relative weighting and stock selection in the Financials sector, particularly American International Group (AIG). The top five performing stocks for the quarter included Wells Fargo, Bank of America, Capital One Financial, J.P. Morgan Chase and UST Inc. The five worst performers for the period were American Int’l Group, Washington Mutual [sold], SLM Corporation, Office Depot [sold] and Entergy Corp. Atlantic Trust - Growth Manager Atlantic Trust Pell Rudman uses fundamental research to identify quality mid-cap companies with the capability to produce above-average growth in earnings, cash flow and return on shareholder equity. Looking back over a number of market cycles, it is rare that you can buy high quality businesses like those we own at a discount to their underlying growth rate and with no premium to the mid-cap growth universe. We believe valuations are particularly compelling today. Health Care came through with the strongest sector contribution after lagging in the first half. One of the biggest absolute contributors was Express Scripts, a leading pharmacy benefit provider which has continued to show growth of better than 20%. Cephalon, a leading biopharmaceutical manufacturer, was another big winner. The negative returns tended to cluster in the energy sector or corporations involved in power generation. Many of these stocks had been very strong in the first half behind the surge in oil and gas prices. The biggest negative contributor by a significant amount was MEMC Electronics, a producer of silicon wafer utilized in the production of solar power cells. It is worth stressing that on a relative basis our energy stocks were much stronger than the benchmark holdings. We sold more stocks than we bought in the quarter as the tougher economic backdrop takes its toll on the overall availability of companies that can continue to provide above average growth. We would hope that when the market starts to reverse, initial price appreciation will be strongest for companies whose fundamentals held up best in the tough times. All performance is presented in Canadian dollar terms, gross of investment management fees. Past performance is not indicative of future results. |
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