manulife financial

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....

IVY CANADIAN FUND $24.81 (CWA Rating: Conservative) invests in high-quality, large capitalization stocks. The $2.6 billion fund’s top holdings include Shoppers Drug Mart, Toronto-Dominion Bank, Manulife Financial, Canadian National Railway, Becton Dickinson & Co., Enbridge, McDonald’s Corp., Thomson Reuters, Imperial Oil and Nestle SA. Ivy Canadian’s breakdown by industry is: Consumer staples, 30.4%; Financials, 18.8%; Consumer discretionary, 13.5%; Energy, 10.9%; Industrials, 9.7%; Health care, 6.7%; and Information technology, 4.7%....

IVY GROWTH AND INCOME FUND $20.21 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ont. M5S 3B5. 1-800-387-0780; Web site: www.mackenziefinancial.com. Load fund — available from brokers) is a balanced fund, holding a mixture of stocks, bonds and cash. The fund has returned 5.7% annually for the 10 years. It lost 0.8% over the last year. The fund’s MER is 2.09%. The fund’s top stock holdings are Shoppers Drug Mart, Manulife Financial, Enbridge, Canadian National Railway, McDonald’s Corporation, Thomson Reuters Corp., Toronto-Dominion Bank and Imperial Oil. The $2.4 billion Ivy Growth & Income Fund holds 22% of its assets in bonds. Interest rates on bonds are now under 5% annually in Canada. That’s the total return that a bond can provide, from today until it matures. However, bonds leave investors at the mercy of inflation, which shrinks the purchasing power of all fixed-return investments. In fact, an upsurge in inflation could wipe out all returns on bonds, and some of their principal besides....

At one time, mutual funds within a particular ‘fund family’ often shared some key investment characteristic, such as a conservative or aggressive investment approach, or a stress on value as opposed to growth. However, due to corporate mergers and takeovers in the mutual-funds industry, and more aggressive marketing, a fund’s membership in a fund family now has little bearing on its investment approach or appeal as an investment. Below, for instance, we analyse five funds from the Ivy Group. (Note that Ivy is now part of Mackenzie Financial, which in turn is part of IGM Financial. The contact information listed for Ivy Growth and Income also applies to the other four.)...

MANULIFE FINANCIAL $38.32 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife reported 7% lower earnings per share in the three months ended June 30, 2008, to $0.66 from $0.57. The decline came mostly from lower gains on stock and bond investments, plus the effects of a stronger Canadian dollar. However, company’s underlying insurance business grew, and insurance claims were lower. For example, the company’s John Hancock Life subsidiary ranked number one in U.S. individual insurance sales for the third consecutive quarter in the three months ended June 30, 2008. It also gained market share despite flat industry sales over the same period. John Hancock’s sales rose 22% in the quarter from a year earlier....

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....

FIDELITY GROWTH AMERICA FUND $18.32 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) uses a broad “bottom-up” approach to identify undervalued companies using fundamentals such as earnings, dividend yield, book value, cash flow and low debt. The $262.1-million Fidelity Growth America Fund’s top holdings include Exxon Mobil, Apple, Hewlett-Packard, Medco Health Solutions, Agco, National OilWell Varco, Travelers Companies, CF Industries Holdings, Lockheed Martin and ENSCO. Fidelity Growth America Fund is broken down by economic segment as follows: 15.7% in financials, 15.6% in information technologies, 13.4% in health care, 12.9% in energy, 11.9% in industrials, 10.1% in consumer staples, 9.5% in consumer discretionary, 3.9% in materials, 3.4% in utilities and 2.9% in telecommunication services. The fund’s one-year loss in Canadian dollars is 21.4%, compared to a loss of 14.4% for the S&P 500 in Canadian funds over the same period. The fund’s MER is 2.59%....

RBC CANADIAN DIVIDEND FUND $46.18 (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) has 43.5% of its portfolio in Financial services stocks. It has a further 19.4% in Energy stocks and 6.5% in Consumer discretionary. The $9.6 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, EnCana Corporation, Bank of Montreal, Sun Life Financial and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.1% annual rate of return. That’s less than the S&P/TSX’s gain of 18.2% over the same period....