How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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SCOTIA CANADIAN GROWTH FUND $47.00 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9269; Web site: www.scotiabank.com. No load — deal directly with the bank) attempts to use an investment’s fundamentals to determine whether it has the potential for above-average growth. The $394.5-million Scotia Canadian Growth Fund’s largest stock holdings include Royal Bank, TD Bank, Potash Corp., Canadian Natural Resources, Canadian National Railway, Bank of Nova Scotia, Crescent Point Energy and Manulife Financial. Scotia Canadian Growth holds 43.3% of its portfolio in the resource sector. Its next-largest segment is financial services, at 27.9%....
CIBC CANADIAN EQUITY FUND $19.69 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Web site: www.cibc.com. No load — deal directly with the bank) looks at fundamentals like earnings, cash flow and debt level to identify companies that the managers see as having above-average growth potential. The $399.3-million fund’s top holdings are: Royal Bank of Canada, EnCana, Research in Motion, Bank of Nova Scotia, CN Railway, Goldcorp, TD Bank, Canadian Natural Resources and Manulife Financial. CIBC Canadian Equity holds 41.8% of its portfolio in resource stocks and 34.6% in finance stocks....
RBC CANADIAN EQUITY FUND $21.21 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) mainly invests in larger-capitalization stocks, but may also buy small- and mid-cap stocks. The $4.2-billion fund’s largest holdings are Royal Bank, Manulife, EnCana, TD Bank, Goldcorp, Bank of Nova Scotia, Canadian Natural Resources, Suncor Energy and Research in Motion. The fund is heavily weighted (44.9%) toward the resource sector; 33.2% of its investments are in finance. Over the last 10 years, RBC Canadian Equity posted a 6.7% annual rate of return. That’s just over the S&P/TSX’s 6.5% gain. The fund lost 19.9% over the last year, compared to a loss of 17.7% for the S&P/TSX. The fund’s MER is 1.96%....
TD CANADIAN EQUITY FUND $21.81 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-866-222-3456; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach to pick stocks. The fund’s managers look at fundamentals, like earnings, cash flow and debt level, to identify what they see as undervalued companies. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, TD Bank, Manulife Financial, Bank of Nova Scotia, Canadian Natural Resources, Sun Life Financial, Suncor Energy, Ivanhoe Mines, EnCana Corp. and Research in Motion. The $2.5-billion fund holds 49.0% of its portfolio in resource stocks. It also has a bias toward financial services stocks, at 32.1%....
These five large mutual funds — one from each of Canada’s big-five banks — suffered last year and early this year. That’s because they were heavily weighted toward financial services and resource stocks. However, many shares in those sectors have moved up since March. We think they have room to go higher. We still feel that the best way to profit in the stock market is to stick with high-quality, well-established companies and to spread your money out among the five sectors. You should also ensure that your investments are diversified within each sector. These five funds continue to stick with high-quality investments. However, you still should adjust your portfolio to reflect the funds’ high weightings in certain sectors....
NEW IRELAND FUND $6.98 (New York symbol IRL; Shares outstanding: 7.2 million; Market cap: $50.3 million; CWA Rating: Aggressive) invests in Irish companies. Bank of Ireland manages the fund. Lower housing prices and a struggling banking sector have hurt the Irish economy. However, the country is open to foreign investment, and has invested heavily in education and training. It is also part of the euro currency zone. These factors should benefit the Irish economy over the long term. The New Ireland Fund’s top holdings are: CRH plc (building materials), 19.8%; Ryanair Holdings (airline), 10.7%; DCC plc (business services), 7.3%; Elan Corp. (health-care services), 5.7%, Aryzta AG (agriculture and food), 4.6%; Kerry Group (food products), 4.3%; Grafton Group plc (building materials), 4.2%; Allied Irish Banks, 4.0%; Dragon Oil plc, 3.7%; and Irish Life & Permanent plc, 3.5%....
INDIA FUND $26.02 (New York symbol IFN; Shares outstanding: 38.6 million; Market cap: $1.0 billion; CWA Rating: Aggressive) mainly invests in large-cap Indian stocks. Blackstone Group manages the fund. India’s economy has grown by more than 9% annually over the last few years. The global recession has hurt the country’s growth, but it could still expand by as much as 6% this year. The $1.1-billion India Fund’s top holdings are: Reliance Industries (conglomerate), 9.9%; Infosys Technologies (software), 9.1%; Bharti AirTel (telecom), 4.7%; Housing Development Finance, 4.0%; Oil & Natural Gas Corporation, 3.0%; HDFC Bank, 2.7%; Bharat Heavy Electricals (engineering and manufacturing), 2.7%; Jindal Steel & Power, 2.7%; ICICI Bank, 2.6%; and State Bank of India, 2.3%....
SINGAPORE FUND $11.65 (New York symbol SGF; Shares outstanding: 9.5 million; Market cap: $110.7 million; CWA Rating: Aggressive) is fully invested in Singapore-based stocks. The Development Bank of Singapore manages the fund. Singapore relies on exports for much of its growth. Major markets, like the U.S., China and Japan, are important to its economy. As these markets recover, Singapore’s prospects should improve. The $106.5-million Singapore Fund’s top holdings are: Singapore Telecom, 12.8%; United Overseas Bank, 9.8%; Overseas-Chinese Banking, 8.8%; Jardine Matheson (various industries), 5.2%; Hong Kong Land Holdings (property), 4.9%; Singapore Exchange (Singapore stock exchange), 4.4%; Wilmar International (agribusiness), 4.2%; Keppel (various industries), 3.7%; Capitaland (property), 3.6%; and City Developments (property), 3.5%....
Around the world, governments have increased spending in a bid to counter the recession. These efforts are now starting to show results. Global economic growth is resuming, and top-quality foreign stocks have rebounded. Here are four closed-end funds that trade on the New York exchange at discounts to their net asset values. All four funds have risen lately, but we still see them as buys. SWISS HELVETIA FUND $11.09 (New York symbol SWZ; Shares outstanding: 32.5 million; Market cap: $360.4 million; CWA Rating: Conservative) mainly invests in large-capitalization Swiss stocks. Hottinger Group, which dates back to 1786, manages the fund....
FORT CHICAGO ENERGY PARTNERS L.P. $8.47 (Toronto symbol FCE.UN; Units outstanding: 136.3 million; Market cap: $1.1 billion; SI Rating: Extra Risk) owns and operates energy infrastructure across North America. One of its major holdings is a 50% interest in the Alliance natural-gas pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge Inc. owns the other 50%. Fort Chicago and Enbridge also own 85.4% of the Aux Sable natural gas liquids plant. As well, Fort Chicago owns 100% of the 1,324-kilometre Alberta Ethane Gathering System. Fort Chicago has added to its power-plant holdings over the last couple of years. It now owns natural gas-fired cogeneration plants in Ontario, California and Colorado, plus power plants in Ontario and Prince Edward Island....