asset management

NEW GERMANY FUND $5.90 (New York symbol GF; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in small and mid-cap German equities. The fund’s manager is Deutsche Asset Management. The $198-million fund’s 52 holdings operate in Germany (91%) and the Netherlands (9%). The New Germany Fund’s top holdings are Fresenius (health care equipment & supplies), 6.8%; European Aeronautical Defense (a Dutch-based aerospace and defense firm), 5.6%; Bilfinger Berger (construction & engineering), 5.2%; SGL Carbon (electrical equipment), 4.2%; Software AG, 3.9%; Qiagen (life sciences), 3.5%; Hannover Rueckversicherung (insurance), 3.5%; GEA Group (chemicals), 3.3%; Rheinmetall AG (an industrial conglomerate), 3.2%; and United Internet (Internet service provider), 3.2%....

CENTRAL EUROPE AND RUSSIA FUND $12.38 (New York symbol CEE; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in larger cap stocks from Russia and central Europe. The fund’s manager is Deutsche Asset Management. The $314-million fund’s 62 holdings are currently invested in Russia (49%), Poland (16%), Turkey (12%), Czech Republic (12%), Hungary (4%), U.S. (4%) and Austria (3%). The fund’s top holdings are Gazprom (a Russian gas utility) at 8.5%; Lukoil (Russia: oil and gas), 7.3%; Ceske Energetike Zavody (Poland: utility), 5.8%; Sberbank (Russia: bank), 5.5%; Rosneft Oil (Russia: oil and gas), 5.4%; Telefonica (Czech Republic: telecom), 4.9%; Telekomunikacja Polska (Poland: telecom), 4.9%; Bank Pekao (Poland: bank), 4.7%; Surgutneftagaz (Russia: oil and gas), 4.5%; and Powszechna Kasa (Poland: bank), 3.8%....

We’ve long advised that investing outside of Canada and the United States can expose you to increased volatility and risk. The sharp downturn in many foreign markets during the current global slowdown proves this. But there are still regions or countries that offer lots of growth potential. We still think that for most investors, the best way to invest in these places is through mutual funds, rather than individual stocks. And you can cut your costs by buying closed-end funds. Here are four foreign closed-end funds that trade on the New York exchange at discounts to their net asset value. All are buys for aggressive investors....

ALGONQUIN POWER INCOME FUND $2.39 (Toronto symbol APF.UN; Units outstanding: 77.6 million; Market cap: $185.6 million; SI Rating: Extra Risk) owns or has interests in 41 hydroelectric facilities — 13 in New York State, 12 in Quebec, nine in New England, four in Ontario, one in Alberta, one in New Jersey and one in Newfoundland. This gives Algonquin total hydroelectric generating capacity of 141 megawatts. Algonquin also has interests in five natural gas-fired plants, a 99-megawatt wind plant, one energy-from-waste plant and two biomass (burning plant matter such as wood chips) facilities in Canada and the U.S., and 17 water distribution and wastewater treatment facilities in the U.S. In the three months ended September 30, 2008, revenues rose 18.6%, to $55.1 million from $46.4 million a year earlier. The increase came because Algonquin’s plants generated more power and energy rates rose. However, cash flow per unit fell 20.8%, to $0.19 from $0.24, mostly due to higher costs....

TD RESOURCE FUND $17.79 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank.) invests in companies with superior asset bases, proven management and the ability to internally finance growth. The $129.1-million TD Resource Fund’s top stock holdings are mostly of “Average” quality or higher. The fund’s holdings include EnCana Corporation, Suncor Energy, Talisman Energy Inc., Goldcorp, Yamana Gold, Petro-Canada, Red Back Mining, BHP Billiton, Husky Energy, Chevron Corporation, Marathon Oil Corporation and Nexen. TD Resource Fund’s industry breakdown is: Energy, 59.3%; and Metals & Minerals, 38.5%. Its MER is 2.15%....

Although resource companies will need an economic recovery to show renewed growth, we think the long-term outlook for global resources demand is still positive. Meanwhile, we think you should cut your risk in this volatile sector by investing mainly in profitable, well-established companies that have an asset base they acquired when asset prices were low, or in mutual funds that hold those stocks. Here are two Aggressive resource funds that expose investors to two different levels of risk, measured by the stocks they hold. Both are down in value lately, but we think they have long-term gains ahead. TD RESOURCE FUND $17.79 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank.) invests in companies with superior asset bases, proven management and the ability to internally finance growth....

BMO DIVIDEND FUND $34.97 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 35.1% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 21.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank, Shoppers Drug Mart, TD Bank, TransCanada Corp., EnCana, Enbridge and Shaw Communications. The fund’s MER is 1.71%. Over the five years to November 30, 2008, the fund posted a 4.6% annual rate of return. The S&P/TSX gained 5.7% annually, but that was largely due to the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 40% or so of its holdings in Resources stocks....

TD CANADIAN EQUITY FUND $19.01 (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 (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, Brookfield Asset Management, TD Bank, Potash Corp., Crescent Point Energy Trust, Nexen Inc., Suncor Energy, Sun Life Financial, Manulife Financial and Research in Motion. The $2.6 billion fund currently holds about 47.6% of its portfolio in Resources shares. It also has a bias towards Financial services stocks at 28.2%....

The performance of these five large funds — one from each of Canada’s big-five banks — has suffered over the last year. That’s because they held high weightings in Financial services and Resources stocks. Financial services have dropped due to turmoil in credit markets. Resources have fallen along with commodity prices on fears that an economic slowdown will cut demand for resources. We still feel that the best way to profit in the stock market is to stick with high-quality, well-established companies, and to diversify among the five sectors, and within each sector. However, you won’t go too far wrong with these five funds. They continue to stick with high-quality issues with sound fundamentals, so their concentrations in certain sectors doesn’t add a lot of risk over the long term. Each has its quirks, but overall they are well positioned for low-risk returns....

NEW GERMANY FUND $10.41 (New York symbol GF; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in middle-market (small and mid-cap) German equities. The fund’s manager is Deutsche Asset Management. The $378 million fund’s 51 holdings are currently in Germany (95%) and the Netherlands (5%). The New Germany Fund’s focus on mid-tier German stocks provides investors with access to some of Germany’s fastest-growing companies. The New Germany Fund’s top holdings are K+S (chemicals), 12.9%; Fresenius (health care equipment & supplies), 6.0%; SGL Carbon (electrical equipment), 4.7%; Salzgitter (metals & mining), 4.2%; Q-Cells (solar cell manufacturing), 3.9%; GEA Group (chemicals), 3.8%; Bilfinger Berger (construction & engineering), 3.3%; Stada Arzneimittel (pharmaceuticals), 3.0%; European Aeronautical Defense (Dutch-based aerospace and defense), 2.9%; and United Internet (Internet service provider), 2.6%....