asset management
CENTRAL EUROPE AND RUSSIA FUND $30.15 (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 International. The $940 million fund’s 67 holdings are currently invested in Russia (59%), Poland (20%), Turkey (7%), Czech Republic (5%) and Hungary (4%). Central Europe and Russia Fund’s top holdings are Gazprom (a Russian gas utility) at 11.4%; Lukoil (Russian oil and gas), 8.0%; Rosneft Oil Company (Russian oil and gas), 6.2%; Powszechna Kasa Oszczednosci (Polish bank), 5.4%; MMC Norilsk Nickel (Russian metals and mining), 5.2%; Cez (Russian electric utility), 5.2%; Bank Pekao (Polish bank), 4.9%; Sberbank (Russian bank), 4.9%; KGHM Polska Miedz (Polish metals & mining), 3.5%; and Telekomunikacja Polska (Polish telecom), 3.1%....
Investing in regions or countries outside of Canada and the United States can entail above-average volatility and risk. But these areas can also offer vast potential growth. We still think that for most investors, the best way to invest in those regions or countries is through mutual funds, rather than individual stocks. And you can cut your costs by buying closed-end funds. Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. All four are buys....
ALGONQUIN POWER INCOME FUND $5.70 (Toronto symbol APF.UN; SI Rating: Extra Risk) has interests in 41 hydroelectric facilities — four in Ontario, 12 in Quebec, 13 in New York State, nine in New England, one in Alberta, one in New Jersey and one in Newfoundland. This represents total 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 facilities in Canada and the U.S. It also has stakes in 17 water-distribution and wastewater-treatment facilities in the U.S. In the three months ended June 30, 2008, revenues rose 13.4%, to $54.2 million from $47.8 million a year earlier. The increase came from higher power-generation levels and energy rates, offset somewhat by the effects of a higher Canadian dollar. However, cash flow per unit fell 16%, to $0.21 from $0.25, mostly because of higher costs....
AIC DIVERSIFIED CANADA FUND $42.87 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds stocks of some U.S. firms. The $1.0 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, FedEx, Thomson Reuters Corporation, Brookfield Asset Management, Royal Bank of Canada, Manulife Financial and Johnson & Johnson. AIC Diversified Canada holds just 17 stocks. The fund holds 49.6% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Energy, 15.2%; Consumer staples, 10.6%; Consumer discretionary, 8.0%; Health care, 7.4%; Industrials, 3.6%; and Conglomerates, 2.3%....
These two AIC funds hold much of their portfolios in financial services stocks. This sector has moved down lately, mostly on concerns over a lack of liquidity for asset-backed securities and exposure to the U.S. subprime residential mortgage market. We prefer diversified funds. But if you must focus on something, the finance sector still offers sound long-term prospects. If you invest in these funds, be sure to adjust the rest of your portfolio so you won’t overly concentrate your stock and mutual fund holdings in the financial sector. AIC AMERICAN ADVANTAGE FUND $5.70 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks, with over 99% of assets in the financial services area....
TD HEALTH SCIENCES FUND $15.69 (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) invests mostly in U.S. companies with a mixture of large-capitalization stocks and earlier-stage biotechnology shares. The fund’s managers believe all these firms will profit from an aging population stimulating higher spending by governments and individuals on health care, drugs and research. The fund’s top holdings include Gilead Sciences, Alexion Pharmaceuticals, Elan Corp. plc, Baxter International, Genentech Inc., Biomarin Pharmaceutical, Wyeth, Monsanto Co., Illumina and Cephalon. The fund’s MER is 2.70%. The $170.3 million fund lost 7.4% over the last year. TD Health Sciences Fund is still a buy.
Sector or ‘theme’ funds entail special risks, but they are much safer than investing in one or two issues in risky fields such as health care and biotechnology. If you invest in sector funds, limit your investment to modest quantities. Above all, invest only in funds with proven management and high-quality holdings. Here are updates on two we like: RENAISSANCE GLOBAL HEALTH CARE FUND $15.78 (CWA Rating: Speculative) (CIBC Asset Management, 1500 University Street, Suite 800, Montreal, PQ. H3A 3S6. 1-800-268-8258; Web site: www.talvest.com. Available from brokers) invests in companies in a variety of segments of the health-care industry. Its selections may include pharmaceutical firms, designers and manufacturers of medical equipment and supplies, and companies in the biotechnology industry....
CHILE FUND $17.05 (New York symbol CH) (CWA Rating: Aggressive) invests primarily in Chilean stocks. It’s managed by Credit Suisse Asset Management, a division of Credit Suisse, Switzerland’s second-largest bank. Prices for copper, a key commodity for Chile, are down from the all-time highs they reached in June, 2008, but still remain strong. Chile is a major exporter of copper, particularly to Asia. It’s the world’s biggest supplier of copper. Other important non-mineral exports are forestry and wood products, food and wine. Top holdings are: Compania de Petroleos de Chile SA (Oil & gas), 20.6%; Empresa Nacional de Electricidad (power), 16.1%; Empresas CMPC (pulp & paper), 11.3%; Enersis SA (power), 5.7%; Compania De Aceros del Pacifico SA (Mining), 5.7%; Cencosud (retailing), 5.7%; Banco Santander Chile (banking), 4.5%; Sociedad Quimiday Minera de Chile (Mining), 4.3%; SACI Falabella (retailing), 4.0%; and AES Gener SA (Electric power), 3.3%....
TD RESOURCE FUND $37.66 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-386-3757; Web ite: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 $279.9 million TD Resource Fund’s top stock holdings are mostly of ‘Average’ quality or higher. The fund’s holdings include Suncor Energy, EnCana Corporation, Talisman Energy Inc., Goldcorp, Yamana Gold, Petro-Canada, Nexen, Alcoa, BHP Billiton, Husky Energy, Chevron Corporation, Marathon Oil Corporation and Weatherford International. TD Resource Fund’s industry breakdown is: Energy, 58.5%; and Basic materials, 39.2%. Its MER is 2.17%....
Resources stocks may indeed be headed much higher in years and decades to come. But there will be inevitable declines along the way. So we think you should cut your risk in this volatile sector by investing mainly in resource stocks of profitable, well-established companies that have an asset base they acquired when asset prices were much lower — or in mutual funds that hold those resource stocks. Here are two Aggressive resource funds that expose investors to two different levels of risk, measured by the resource stocks they hold. Both have done very well for us over the last few years. We think they have further gains ahead. TD RESOURCE FUND $37.66 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-386-3757; Web ite: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....