Monthly Archives: May 2010

Anthony Sabti

Top 10 Performing Funds (part 1)

In a 10-part series, looks at top performing funds in their categories over 10 years.  In the emerging markets category, AGF Emerging Fund comes out on top.  The fund has a 10 year return of 9.1% well above the benchmark MSCI Emerging Index return of 6.2%.  The manager, Patricia Perez-Coutts has been managing the fund since 2002.  Being born and studying in Peru and living in Brazil, she has deeply-rooted understanding of the developing Latin American market.  The fund currently has a 25.5% allocation to Latin America, a couple percentage points over the benchmark index.  One of the key themes in emerging markets is the rise in consumer spending, which is why AGF Emerging is also overweight in the consumer goods and services sectors.  Patricia says that consumer spending in emerging countries has still lots of room to grow. 

The article goes on to explain that, despite emerging markets being all the rage today, they weren’t always as popular.  Several emerging economies were marked by political and economic instability in the mid 90’s, but the harsh lessons learned from that period led to debt repayment at the government level and cleaner balance sheets at the corporate level.  Also, the low interest rate period of the early 2000’s led to widespread global spending, which led to rising commodity prices and resource rich countries like Brazil (and Canada!) benefited. 

You First Portfolios will typically have around a 10% weighting emerging market sector. The risk level for emerging market funds will usually be “high”, because returns tend to be more volatile than developed equity markets. 

To read the full article click here


Odette Morin

Putting Greece’s Troubles in Perspective

Some of you may be wondering about the effect of the Greece, Spain, Portugal and potentially soon Italy crisis on your investments. Luckily, you will recall that we have dramatically reduced your portfolio exposure to Europe last time we met. We expected volatility in that region including the UK for several months now.

Without minimizing the situation, Europe will likely have little effect on the World capitalization. It is unlikely to affect your investment in a big way over the mid or long-term. Canada will likely not be affected much at all other than through currency fluctuations. In times of uncertainty, people go back to the US dollar. That is why our dollar has dropped a little in recent days. Remember that a lower Canadian dollar is a good thing for us being an exporting country.

Also, our resources are in big demand from the expanding economies of Asia and Emerging Markets. That is really where the growth will come from going forward. Greece & Spain are a drop in the bucket compared to that.

Also important to remember, here is a quote from Chuk Wong, Dynamic Manager on this issue:

“Macro headlines encourage misjudgement and fear creates opportunity. A company’s operating fundamentals are ultimately what matters and fear-driven valuation discounts are the best friend to long-term value-oriented investors like us”.

Again, I don’t want to minimize the crisis, because it is not that black and white but given the overall global outlook, the fact that we have lowered your exposure to Europe and the US and increased Canada and Emerging Markets, I would not be overly concerned.

If we survived the near apocalypse year we just went through, we can and will eventually survive Europe’s troubles!

You may be interested in reading this articles on the subject of Greece common Tax Evasion. An improvement in the Greek Tax collection system will go a long way towards invigorating investor confidence in the region.

click here for article