The Guardian Global Dividend Growth Fund is a well-diversified, go-anywhere, global dividend fund with a highly disciplined management style that focuses on rates of change to spot trends, rather than on absolute values. Here’s a look at what makes this fund tick.
The fund is managed by Sri Iyer and Fiona Wilson along with the team at Guardian Capital, using a proprietary, multi-factor quantitative model that screens the global equity universe looking for positive rates of change in the fundamentals of companies. These factors include growth, payout ratios, efficiency, valuation, and investor sentiment. The team also conducts a fundamental review to validate any of the potential buy candidates to ensure the rating is appropriate.
The result is a well-diversified portfolio that holds between 70 and 100 names, holding just over 90 stocks at the end of September. The sector and country mix is the byproduct of the stock selection process.
The largest holdings at the end of September included Apple Inc. (NASDAQ: AAPL), Ferrovial SA (BME: FER), Reynolds American Inc. (NYSE: RAI), Johnson & Johnson Inc. (NYSE: JNJ), Altria Group Inc. (NYSE: MO).
Nearly 55% of the portfolio is invested in U.S. equities, with European names making up most of the rest. The fund is conservatively positioned – overweight the more defensive sectors such as consumer defensives, communications, and utilities. It is underweight financials, consumer cyclicals, and materials. This would be expected to hold up well in periods of higher volatility.
I really like the investment process used by the managers. It is disciplined and repeatable. It focuses more on rates of change rather than the absolute values, which can help identify trends sooner. I like that it takes a lot of the emotion out of the process, yet has the fundamental oversight of the investment team for verification. It is not a black box strategy.
I would expect this fund to deliver average to above-average returns, with lower-than-average volatility. It is also quite different from its benchmark. This, of course, can be a double-edged sword, and could potentially result in periods where it underperforms for an extended period of time. Still, I believe it can be a great core global equity holding for most investors.
If you are unable to purchase this fund through your advisor, you could invest in the BMO Global Dividend Fund (GGF70725), which is virtually identical, except for a slightly higher MER at 2.48% vs. 2.32%. If you prefer an ETF, you could look at the Horizons Active Global Dividend ETF (TSX: HAZ).
Courtesy Fundata Canada Inc. © 2015. Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc. This article is not intended as personalized advice. Investments mentioned are not guaranteed and carry risk of loss.
