asset management

Becker Milk, $8.40, symbol BEK.B on Toronto (Shares outstanding: 1.8 million; Market cap: $15.1 million), owns and manages 71 retail commercial properties with a total of 88 individual retail stores (most are single store sites, but some are multi-store plazas). One property is in metro Toronto, and the rest are in other parts of southern Ontario. On January 31, 2009, the company had leased all 88 of its individual retail stores, as well as four residential sites to third parties. The residential sites are made up of apartments above the retail commercial sites. Becker has leased 62 stores to Mac’s Convenience Stores Inc. (a subsidiary of Alimentation Couche-Tard Inc., symbol ATD.B on Toronto), and the remaining 26 are leased to other tenants. In addition, the company is bearing the cost of five parcels of unoccupied land (one of which is being held for sale) and one vacant building. Becker Milk pays a regular dividend of $0.30 a share twice yearly, for a current yield of 7.1%. It also recently paid a special dividend of $2 a share....

Sector, or “theme”, funds are not without risk, but they are much safer than investing in one or two companies in more volatile fields, such as health care and biotechnology. If you choose to invest in sector funds, you should limit your investment to modest amounts. Above all, invest only in those with proven management and high-quality holdings. Here are updates on two we like. Both have outperformed the S&P 500 index by a wide margin over the past year. TD HEALTH SCIENCES FUND $13.54 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) mainly invests in large-capitalization health-care stocks and earlier-stage biotechnology shares in the U.S. The fund’s managers believe these firms will benefit from increased health spending spurred by an aging population....

When we judge the investment quality of an individual company, we take nine key factors into account. These are: a record of profit; a record of dividends; an influential industry position; balance-sheet strength; geographical diversification; freedom from business cycles; freedom from excess regulation or insider abuse; ability to profit from lasting secular trends (such as global economic liberalization); and the ability to cash in on habitual customer behaviour. Mutual-fund ratings are more complex, since they are a step removed from these factors. Before we award our CWA Fund Ratings (Aggressive, Conservative or Income), we assess a fund’s strengths and weaknesses in several key areas. We start by looking at the quality of the fund’s holdings, based on our nine key factors. Then we look at the degree to which its holdings are spread out across the five main economic sectors: Manufacturing, Resources, Consumer, Finance and Utilities. Funds that focus on narrow segments are more risky or aggressive than those that diversify, even if they focus on a conservative area, such as Utilities....

RBC CANADIAN DIVIDEND FUND $37.65 (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) invests in well-established, dividend-paying companies. In fact, it invests solely in common stocks. That’s why, despite the fund’s name, we rate it Conservative rather than Income. The $7.1-billion RBC Canadian Dividend Fund’s top stock holdings are: Royal Bank of Canada, Bank of Nova Scotia, TD Bank, Manulife Financial, Brookfield Asset Management, EnCana, Bank of Montreal, TransCanada Corp. and Power Corp. RBC Canadian Dividend is a Conservative buy.

TD CANADIAN SMALL-CAP EQUITY FUND $21.56 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-386-3757; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) is a fund we rate as Aggressive. The fund invests in small to medium-sized companies that its managers feel are undervalued or offer strong growth potential as the economy improves. These firms are mainly located in Canada, but the fund invests in other countries, as well. Its top 10 holdings are: RuggedCom Inc., Eldorado Gold, Red Back Mining, Celtic Exploration, Addax Petroleum Corporation, Industrial Alliance Insurance & Financial Inc., TMX Group Inc., Progress Energy Resources, Cogeco Cable and Aecon Group. TD Canadian Small Cap Equity Fund stands out among small-cap funds because it focuses on well-established companies with strong management and prominent positions in their industries. It also invests in Canadian stocks. The riskiest small-cap funds invest in less-regulated overseas markets....

RENAISSANCE GLOBAL HEALTH CARE FUND $13.79 (CWA Rating: Speculative) (CIBC Asset Management, 1500 University Street, Suite 800, Montreal, Quebec. Web site: www.renaissanceinvestments.com. Available from brokers) invests in companies from across the health-care industry. These may include pharmaceutical and biotechnology firms, and companies that design and make medical equipment. The $579-million fund’s managers look at a firm’s financial strength, the quality of its management and whether it is developing new products that could fuel future growth. The fund’s top holdings include Schering-Plough Corp., UnitedHealth Group, Merck & Company, Sanofi-Aventis, Abbott Laboratories, Wyeth, Forest Laboratories, Shionogi & Co. and Eli Lilly & Co....

Brookfield Asset Management 4.75% Series 17 Preferreds, $14.85, symbol BAM.PR.M on Toronto, are perpetual preferred shares. That is, they have no fixed maturity date, and they have to pay their stated dividend forever, or “in perpetuity,” before they can pay common dividends in any given year. The shares began trading at $25 each in late 2006, and have fallen steadily since. In general, the prices of preferred shares are down lately, in spite of lower interest rates. There are a number of likely reasons for this: Preferred shares behave more like long-term, fixed-income instruments rather than short-term investments. While short-term interest rates are falling, the outlook for long-term rates is less certain....

These five large funds — one from each of Canada’s big-five banks — have suffered over the last year. That’s because they were heavily weighted toward financial services and resource stocks. Financial services companies are still dealing with tight credit markets. As well, the recession has cut demand for resources. This, in turn, has driven down the prices of resource stocks. 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 your investments are diversified within each sector. These five funds continue to stick to high-quality investments. However, you still should adjust your portfolio to reflect the funds’ high weightings in certain sectors....

Sprott Resource Corp. $2.70, symbol SCP on Toronto (Shares outstanding: 81.9 million; Market cap: $221.1 million), invests in natural resources. The company is based in Vancouver. In September 2007, General Minerals Corp. (a gold exploration company) hired Sprott Consulting, a wholly-owned subsidiary of Sprott Asset Management (symbol SII on Toronto), to make all future investments on General’s behalf. General Minerals then changed its name to Sprott Resource Corp. and began selling shares to the public at $1.50 each in September 2007. Soon after, Sprott Resource started financing joint ventures in the resource sector, investing in natural-resource companies and directly buying commodities, like gold and silver bullion....

Brookfield Properties Corp., $7.14, symbol BPO on Toronto (Shares outstanding: 391.1 million; Market cap: $2.8 billion), owns, develops and manages office buildings in some of North America’s largest cities. Brookfield’s commercial portfolio consists of interests in 108 properties totalling 74 million square feet in the downtown cores of New York, Boston, Washington, D.C., Los Angeles, Houston, Toronto, Calgary and Ottawa. Brookfield Asset Management (symbol BAM.A on Toronto), holds a 50% interest in Brookfield Properties. The other 50% trades on the Toronto exchange. Office buildings account for about 78% of Brookfield’s revenue, and residential housing accounts for about 22%. Brookfield’s residential land-development and homebuilding operations are mainly based in Alberta (42% of total acres), Texas (26%), Colorado (18%), Ontario (13%) and Missouri (1%)....