|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 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.