Dateline: 1/26/98

December produced 24 Power Performers, up from 21 in November. Significant is the addition of Fidelity European Growth to the list, the first time an International Fund has made the list in the last six months. You can check out the chart for details. I won't go over it much except to say that most of the Power Performers this month were gainers for the month, contrasted with last month when all the Canadian Equity Funds were losers. My focus this week is on an analysis of all the Power Performers for the last six months.

Power Performers Six Month Review

Since this month's chart is to Dec. 31, 1997, I thought it might be worth reviewing the Power Performers for the last six months of last year An Index of all the Power Performer Charts to date, including one added for July 31, can be found on my Power Performers page.

Additionally I've prepared a special chart, my Six Month Report, listing all 48 mutual funds that made the Power Performers list at least once in the last six months. It shows how much each fund gained or lost in the month it was a Power Performer and shows an X if it was not a PP in a particular month. It also shows how much the fund gained or lost from July 1 to December 31. You may want to open the chart on a second browser to refer to while reading this analysis, open it on the same browser and use the backwards and forwards buttons to navigate back and forth, or print it out.

The month ending September 30 had the most PPs, 39 of them., and the month to November 30 had the fewest, 21 in all. Of the funds, only twelve made the Power Performers list every month. Of those, five were Canadian Equity Funds and seven were American. These twelve funds are the cream of the crop, the very best mutual funds of the last six months based on consistency and performance. If you had held any of these funds for eighteen months to five and a half years, you would have had a compound annual rate of return of 20% or better. Three others made the PP list five times out of six, and one of those, the PH&N Dividend Income Fund, was a gainer for every month it made the list and had the highest six month return of any of the 48 funds, 21.5% from July 1 to December 31.

Indicative of the caution one should take in assessing mutual funds are the cases of the Marathon Equity Fund and the 20/20 Canadian Resources Fund. Both were Power Performers once, Marathon in July and 20/20 Canadian Resources in September. But the rest of the time they did not fare as well. Marathon was down 11% and 20/20 was down 4.6% for the six month period. Clearly, things can turn around quickly for a fund.

Of the fifteen top performers noted above, the best overall performers for the latter half of 1997 were the PH&N Dividend Income Fund as mentioned with 21.5% return, the Clean Environment Fund which gained 20.1%, followed by Investors US Growth which was up 19.5% and MD US Equity which gained 18.3%. All of these funds were on the plus side of the register most months, the Investors losing value only in August and Clean Enviro losing value only twice, a paltry 0.2% loss in October and a 2.2% loss in November, and MD US Equity slipping only in October.

Other funds noteable for their consistency are Bissett Small Cap Fund and the Chou Associates Fund, each of which had only one losing month in the last six.

The AIC Advantage Fund, which had been flying high for most of the year, suffered badly in October and November and finished the last six months up only 5.7%, the lowest return of the fifteen All Stars. It had the highest one month gain of any of the twelve, a whopping 14.9% in September, but also the largest loss of 8.3% in November. Which goes to show that what the market giveth, the market can take away.

An investment in any of these fifteen funds would be worthwhile this RRSP season, though to meet Canadian content requirements, you'll have to be top heavy in the Canadian Equity Funds. My pick for the best funds to invest in for your RRSP this year based on the above and their overall track records are: AIC Advantage, Clean Enviro Fund, GBC Canadian Growth, Bissett Small Cap and Bissett Canadian Equity for the Canadian component and either the Investors US Growth or the Ethical North American Equity for the foreign content. The PH&N Dividend Income Fund is a dandy fund, but, unfortunately, carries a minimum investment requirement of $25,000.

Portfolio Review

In the last Monthly Mutuals Analysis we set up three portfolios based on three different criteria and the chart below shows how we have fared since.

Portfolio # 1 (Buy Strategy - Fund must be in the Top 25 Performers for a Three Month period and the One Month performance should not be negative nor should any gain be excessive compared to the Three Month. Sell on 5% slide.)

Portfolio Value at January 23, 1998 - $25,723.15

The sale of two funds due to a slide in their values greater than 5% leaves us with cash of $10,490.16. We reinvest that in the Friedberg Currency Fund again, buying 226.4 shares at $21.64 and in the National Trust Dividend Fund buying 270.7 shares at $18.10. And we keep $490.16 in cash. It might seem strange to sell the original Friedberg shares at $21.03 and then to buy them back at a higher price, but it is the result of following our buy and sell criteria. Remember that this portfolio is a test of a strategy and not a recommendation.

Portfolio # 2 (Buy Strategy - Same as Portfolio # 1 plus the fund must have a better than 15% performance for the One Year, Three Year and Five Year periods. Sell at 5% slide)

No funds qualified for purchase last time. Portfolio remains at $25,000 cash. This month we buy 270.7 shares of the National Trust Dividend Fund at $18.10, 111.8 shares of Investors US Growth Fund at $43.84, 393.6 shares of Associate Investors at $12.45 and 150.2 shares of Atlas American Large Cap Growth Fund at $32.63. That leaves us with $5000 in cash. Although a few other funds meet our buy criteria, they require a minimum purchase greater than the $5000 we want to invest.

Portfolio # 3 (Buy Strategy - Fund must be a Power Performer and it must have positive Three Month and One Month figures. Sell on 5% slide.)

Portfolio Value at January 23, 1998 - $24,779.68

We are making no trades in Portfolio # 3 this month.

Controls (2 Funds purchased to buy and hold as benchmarks for our portfolios.)

So far, Portfolio # 1 is the best performer, even with selling a fund and buying it back again. The Trimark Fund as a benchmark comes in second.

Changes to Investing (Canada)

If you haven't yet tried out the Investing (Canada) Bulletin Board, we invite you to do so. Ask questions, leave comments, engage in debate, whatever. Maybe you have some thoughts on mutual fund buying strategies. Or a hot stock tip. Share those ideas with the world!

We have a Chat room, but so far the traffic has been pretty sparse. If you want to chat live with myself about anything, send me an email and we can arrange a mutually convenient time.

Next week:

An exclusive interview with Trevor Newton of Stockscape.

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