Phillips, Hager & North Investment Management Ltd. today announced the launch of four new investment funds: BonaVista Canadian Equity Value Fund; BonaVista Global Balanced Fund; PH&N Currency-Hedged U.S. Equity Fund; and PH&N Currency-Hedged Overseas Equity Fund.
The BonaVista funds reflect the relative value investment style of BonaVista Asset Management Ltd., a wholly owned subsidiary of PH&N, which is responsible for managing the portfolios. BonaVista’s approach to managing Canadian equities focuses on relative value, whereas PH&N’s approach places a greater emphasis on growth.
“The introduction of the BonaVista funds to PH&N’s lineup gives investors the opportunity to diversify the equity portion of their portfolio by investment style,” said John Montalbano, president of PH&N, in a release.
BonaVista is headed by Terry Bacinello, who founded the firm in 1994. BonaVista’s relative value investment style emphasizes a stock’s valuation relative to the market. The managers employ a stock-by-stock approach to portfolio construction, looking for companies that demonstrate superior business fundamentals and that are favourably priced. The aim of BonaVista Canadian Equity Value Fund is to build a portfolio of above-average companies that are available at below-average prices relative to the overall market.
This relative value style will also apply to the Canadian equities in BonaVista Global Balanced Fund, which draws its non-North American equity exposure from the PH&N Overseas Equity Fund (without any duplication of management fees).
Currency-Hedged U.S. Equity Fund and Currency-Hedged Overseas Equity Fund are designed to provide investors with exposure to foreign equity markets without exposure to foreign currencies. These funds seek to minimize the fluctuations associated with foreign currency movements by hedging the currencies in which the funds have exposure back into Canadian dollars.
The Currency-Hedged funds are invested in units of “core” PH&N funds (the U.S. Equity Fund and Overseas Equity Fund) without any duplication of management fees. Currency exposure is hedged through the use of derivatives (currency forward contracts). The funds will remain fully hedged, to the extent possible, at all times.
“Exposure to foreign equities is a part of building a well-diversified balanced portfolio,” said Montalbano. “Foreign equity markets offer greater sector and geographic diversification than is available in Canada, but investing outside of Canada also exposes investors to fluctuations in currency, which represent an additional form of diversification but also an additional risk. For investors who wish to minimize currency fluctuations, the Currency-Hedged funds offer that additional choice.”
PH&N reported that once they reach a reasonable size, the BonaVista funds are expected to have “normalized” MERs of between 1.15% and 1.25%. Currency-Hedged U.S. Equity Fund is expected to have a “normalized” MER of between 1.25% and 1.35%, while Currency-Hedged Overseas Equity Fund’s “normalized” MER is expected to be between 1.55% and 1.70%.
As with all PH&N funds, a minimum initial investment of $1,000 (per fund) is required to purchase units in the BonaVista funds and the Currency-Hedged funds. A minimum account size of $25,000 also applies.
PH&N is one of Canada’s leading independent investment counselling firms, with over $60 billion in assets under management on behalf of individual investors, institutional pension plans, foundations, endowments and non-profit organizations across Canada.