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Q1/6 Focus on ETFs
Q4/5 LW Canadian Equity
Q4/5 Saxon High Income
Q3/5 Saxon Small Cap
Q3/5 BG Income
Q2/5 Trimark Canadian
Q2/5 MB Fixed Income
Q1/5 BG Canadian Intrinsic
Q1/5 MB American Equity
Q1/5 Mawer N.C. Closure
Q4/4 Mawer Cdn Equity
Q4/4 Mawer Balanced RSP
Q3/4 Sceptre Equity Growth
Q3/4 Saxon World Growth
Q2/4 BG Small Cap
Q2/4 Mawer U.S. Equity
Q1/4 PH&N Cdn Growth
Q1/4 Leith Wheeler US Eq
Q4/3 iShares S&P500
Q4/3 BG Canadian Equity
Q3/3 North Growth US Eq
Q3/3 HSBC Mortgage
Q2/3 MB Cdn Eq Growth
Q2/3 Batterymarch US Eq
Q1/3 Saxon Stock
Q1/3 BG Balanced
Q4/2 Mawer New Canada
Q4/2 Perigee T-Plus
Q3/2 PH&N Dividend Inc
Q3/2 PH&N Bond
Q2/2 Leith Wheeler Cdn Eq
Q2/2 Perigee Diversifund
Q1/2 PH&N Cdn Equity
Q1/2 Mawer U.S. Equity







Leith Wheeler Canadian Equity

While the S&P/TSX Composite suffered a 12.6% loss during 2001, the Leith Wheeler Canadian Equity fund was in the top quartile of its class, gaining 4.24%. Indeed, the fund has lost money in only one of the last five years. By the end of Q2, the fund had a five-year average annual return of 7.4% compared to 3.7% for the S&P/TSX Total Return index. For the first 6 months of the year, the fund was up 6.6% which compares favourably with the S&P/TSX Total Return index which slid 6.3%.

The fund is managed by a team of thirteen managers with four Canadian equity specialists who share a value-oriented investment philosophy. Much emphasis is placed on management interviews and in-house research during the investment process.

The fund's portfolio, taken as an aggregate at the end of Q2, is somewhat expensive from a deep value point of view, though not as expensive as the S&P/TSX Composite. It's dividend yield of 1.7% is comparable to the index's. However, it has a low earnings yield of 1.3% largely because of two holdings which have strongly negative 12 month trailing earnings. If the fund's positions in Nortel Networks and Creo Products are excluded, its earnings yield rises to 4.75%. An earnings yield of 4.75% is a relatively good value compared to the S&P/TSX Composite's median earnings yield of 2.9%. The fund's price-to-book ratio, at 2.0, is also somewhat on the high side for value investors, but is not out of line given current market conditions.

So far this year, the fund has added Canadian 88 Energy, Tesma International, and Mullen Transportation to its portfolio. It also significantly increased it holdings in Westjet Airlines. These acquisitions were financed in part by the sale of positions in Teck-Cominco, Summit Resources, AGF Management, and CI Fund Management, as well as a reduction in holdings of the Enerplus Resources fund and the Canadian Hotel Income properties REIT.

The fund has a large stake in the interest-rate-sensitive financial sector, which represents 32.5% of its portfolio. The fund's sector allocations have not changed substantially since the beginning of the year, nor has the fund's cash position which stands at 1.9%. At the end of July the management team seemed confident that good values could be found in the market, and expressed guarded optimism about the prospects for a turnaround. William Wheeler was recently reported in the Globe and Mail as saying that "Markets move between fear and greed and we're well into the fear mode now.".

For the frugal investor, the Leith Wheeler Canadian Equity fund offers a low 1.4% MER, a low 28% turnover rate and a respectable long-term track record. However the $50K minimum investment will put this fund out of the reach of many investors.

FF: Q2 2002

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