{"id":11910,"date":"2014-05-21T17:29:49","date_gmt":"2014-05-21T09:29:49","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=11910"},"modified":"2014-05-25T17:35:42","modified_gmt":"2014-05-25T09:35:42","slug":"a-rated-sentry-smallmid-cap-income-fund-above-average-return-below-average-risk","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2014\/05\/21\/a-rated-sentry-smallmid-cap-income-fund-above-average-return-below-average-risk\/","title":{"rendered":"A-rated Sentry Small\/Mid Cap Income Fund: above-average return, below-average risk"},"content":{"rendered":"
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ShutterStock image<\/figcaption><\/figure>\n

The Sentry Small\/Mid Cap Income Fund has long been one of my favourite\u00a0small- and mid-cap offerings available. Managed by the Sentry Investments team\u00a0of Aubrey Hearn and Michael Simpson, it has the dual objective of providing both\u00a0consistent monthly income and capital growth. And so far, the fund has delivered\u00a0on its promise. Hence the consistent Fundata FundGrade \u201cA\u201d ratings.<\/p>\n

Sentry considers this fund to be a feeder fund to its highly successful Sentry\u00a0Canadian Income Fund. It invests in the same type of companies, namely those\u00a0with high returns on invested capital, modest cash flow expenditures, and the\u00a0ability to generate free cash flow, which are trading at a valuation that is less than\u00a0their true value. The big difference is the companies in this fund are just too small\u00a0to be included in the large-cap focused Canadian Income Fund.<\/p>\n

The portfolio is fairly diversified, holding approximately 60 names, with the\u00a0top 10 making up just under 30% of the holdings. With its emphasis on income,\u00a0the portfolio looks much different than the small-cap index. It is significantly\u00a0underweight in energy, materials, financials, and real estate. It has a heavy\u00a0emphasis on industrials, so it should perform well as the economy grows, even at\u00a0modest levels.<\/p>\n

The managers have also significantly increased their exposure to U.S.-based\u00a0companies. They can invest up to 35% outside of Canada. At the end of March\u00a0they were near their cap, with 33% invested in the U.S. They believe that the U.S.\u00a0is better positioned for economic growth than is Canada. Further, it continues to\u00a0provide opportunities for diversification at attractive valuations.<\/p>\n

The fund has consistently generated returns that have outpaced not only the index,\u00a0but its peer group. An exception would be 2009 when it finished in the third\u00a0quartile, despite posting a 43.5% gain. As impressive as returns have been, the\u00a0volatility profile has been stellar. It has been significantly less volatile than small\u00a0and mid-cap stocks, but also its large-cap brethren. That\u2019s earned it the Fundata\u00a0FundGrade A Grade for April and the Fundata FundGrade A+ Rating for 2013.<\/p>\n

Still, with a focus on mid-caps, it does have the potential to be more volatile than it\u00a0has been.<\/p>\n

Another interesting factor is that this fund pays a monthly distribution of $0.05 per\u00a0unit. At current prices, this is a yield of approximately 2.9%.<\/p>\n

The biggest drawback to the fund is that it is fairly expensive, with its 2.77%\u00a0MER. Thus far, this has been a fund where the risk-adjusted performance has been\u00a0worth the extra cost. Considering the management team and investment approach,\u00a0I expect that at least for the medium term, that trend will continue. I expect that it\u00a0will continue to deliver above-average returns with below-average risk.<\/p>\n

Fund company: Sentry Investments
\nFund type: Canadian Focused Small\/Mid Cap Equity
\nFundata FundGrade\u00ae Rating: A
\nStyle: Blend
\nRisk level: Medium
\nLoad status: Optional
\nManager: Aubrey Hearn since July 2005; Michael Simpson since July 2005
\nMER: 2.77%
\nCode: NCE 721 (front end)
\nMinimum investment: $500<\/p>\n

Courtesy of Fundata Canada Inc. \u00a9 2014. Dave Paterson, CFA, is the Director of\u00a0Research, Investment Funds for D.A. Paterson & Associates Inc.\u00a0Investments mentioned are not guaranteed and\u00a0carry risk of loss.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The Sentry Small\/Mid Cap Income Fund has long been one of my favourite\u00a0small- and mid-cap offerings available. Managed by the …<\/p>\n","protected":false},"author":44,"featured_media":10489,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[3988,3254,743],"class_list":["post-11910","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business-2","tag-finance","tag-markets","mauthors-dave-paterson","mauthors-fund-library-newswire"],"_links":{"self":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/11910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/comments?post=11910"}],"version-history":[{"count":0,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/11910\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media\/10489"}],"wp:attachment":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media?parent=11910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/categories?post=11910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/tags?post=11910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}