Value Funds Shone in March

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The market hit its peak on March 10th, which means that two-thirds of the month was spent in retreat. In spite of that, there are still 60 Power Performers and 40 Super Power Performers for the month.

An aside for new readers - my Power Performer table lists all Canadian mutual funds for the month that have done better than 20% annual average compounded return over each of the one year, three year and five year periods. My Super Power Performer table lists all funds that have returned 25% for each of those time frames.

Checking out the Performer lists, we note that most of the funds (with a few exceptions) posted a loss for the one month period. And those that were substantially on the plus side had major holdings in old economy stocks.

In fact, if we look at the Top 25 mutual funds for the month as listed at The Vancouver Sun website, we see that five of them are AIC Advantage funds. AIC's principals, Jonathan Wellum and Michael Lee-Chin, are well known for their value approach to investing. They actively try to emulate the Wizard of Omaha, Warren Buffett, and, in fact, each of their funds holds a substantial interest in Berkshire Hathaway and in the companies that Buffett favours.

AIC's funds, formerly high flyers, have been beaten down in the last year, as has Berkshire Hathaway itself. But in the wake of the tech meltdown in March and much of April, the value funds have taken off. Those five AIC funds in the Top 25 all had a better than 19% return for the month.

Other funds on the Top 25 list include two more value funds - Guardian Canadian Equity Value Fund and BMO US Value Fund. Then there are five energy and natural resources funds as well as three financial sector funds. Many of the other ten are also oriented to old economy stocks.

The only funds to make both the Top 25 funds for one month and my Power Performer list are Sagit's Cambridge American Growth Funds. I've written disparagingly of Sagit's stable of funds here previously. These small funds have been very top heavy in relatively unknown stocks such as Summedia.com and Dragon Pharmaceuticals.

But the fund managers have tempered this unbalance of late with a solid core of blue chips - both old and new economy. Names such as Microsoft, IBM, Cisco, Coca Cola and Intel. I have to give credit where credit is due, and Cambridge's ability to ride out the recent storm, and even profit from it, speaks well of their strategy. The table below shows Cambridge's Top Ten Holdings as of March 31, 2000.

Their strategy appears to be to hold a solid core of stable stocks with growth potential and then to invest a percentage of the fund in speculative stocks that may pay off in spades. Those stocks are eventually liquidated with more plowed back into the blue chips and a portion in a new speculation.

It's still a risky fund in my book, but you can't argue with success!

Other Links of Interest

GlobeFund - Canada's premier mutual fund site. Part of the Thomson Financial media group.
The Fund Library - Another superb resource for canadian mutual fund investors.
The Fund Counsel - Economists Levi Folk and Richard Webb run this excellent site.
U.S Mutual Funds - About.com Guide Marlene Dziegeleski steers you through the world of US mutual funds.