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Award-winners Sentry, Front Street walk the road the less traveled

Monday November 05, 2012

You may already know a little something about the bigger fund companies in Canada – names like Mackenzie, Fidelity, Franklin Templeton, CI, AGF, Invesco, Dynamic, IA Clarington, and of course the big banks. You may have some of your retirement money with those companies, which is fine. I know I do. They are all big, strong, well-run businesses that have stood the test of time, and there is some peace of mind in that fact. But what about all the other guys? Among the legion of smaller companies, there are also a few standouts. Not quite as noisy as the elephants, perhaps, but great little performers just the same.

In this article I want to shed some light on a couple of such fund companies that aren’t spending millions on advertising to your attention. Toronto-based Sentry Investments and Front Street Capital have both earned a reputation for solid performance, and some standout award-winning funds.

Sentry Select

Sentry is a great little fund company (over $8 billion in assets under management) that has a particular expertise in Canadian companies in the mining and resources sectors. Many of their funds won the presitigous Fundata FundGrade A+ Rating in 2011, and consistently score monthly FundGrade "A" ratings through the year. They have also scored numerous Lipper awards over the last five years. I really like their Sentry Canadian Income Fund, Sentry Growth and Income Fund, Sentry Precious Metals Growth Fund, and Sentry REIT Fund.

Sentry has been getting wonderful results through a decade of mostly mediocre markets, and that is impressive to see.

Front Street Capital

Front Street Capital has approximately $3 billion in assets under management, and runs some 40 funds, which is not bad at all for a firm that was founded in 2001.

This is another firm that has won many awards, due mainly CEO Frank Mersch and Senior Portfolio Manager Norm Lamarche who have proven to be two of the best fund managers in Canada over the last 20-plus years. The tag line for the firm is “Not the Index,” and it’s the right moniker for the company. This is not a company where one should invest a majority percentage of their RRSP (I’d say not more than 10% to 15%, depending on your specific goals and risk tolerance), but it’s a great place for TFSAs and a portion of an open account.

Another reason to invest with Front Street is that they have “skin in the game.” Today Front Street's partners have over $150 million invested in Front Street funds.

They are small enough to be fast and nimble and they have top managers who aren’t afraid to think “outside the box.” This style of investing isn’t going to be for everybody, because it can be more volatile than index type funds, but it has proven to deliver value over time. It works especially well with dollar-cost averaging strategies. For instance, if you have $120,000 you’d like to allocate to Front Street, rather than going in with the $120,000 as a lump sum, consider a dollar-cost average strategy, committing $10,000 a month for a year to reduce the risk. We are living in times where markets have been very volatile, and we are not riverboat gamblers, so it makes sense to be prudent with our decision-making.

If you are looking for a shop to invest some money in tough times with the goal of actually making some money, and you have a mid- to long-term time horizon, have a look at Sentry Select and Front Street.

 

 

Generic Mutual Fund Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated.

Personal Opinions & Recommendations Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call the author to discuss your particular circumstances.


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