David Fingold, vice-president and portfolio manager at Dynamic Funds
Focus: International equities
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MARKET OUTLOOK

As bottom-up stock pickers, we don’t make market calls. We have no targets for market averages and don’t manage money relative to the indexes. We invest in a concentrated portfolio of high quality companies that we think will do well over the next three to five years. Our most concentrated funds, such as the Dynamic Global Discovery Fund, own 20 companies while a more diversified portfolio, like the Dynamic Global Dividend Fund, owns 25 companies. We also offer actively managed ETFs, including Dynamic iShares Active Global Dividend (DXG) and Dynamic iShares Active US Dividend (DXU), which have up to 25 company portfolios. 

When we own companies that are in cyclical industries, we do have a positive medium-term view of the industry. The industries we presently like include, but aren’t limited to: banking (JP Morgan), defence (Northrop Grumman, Elbit), construction (Belimo, GCP), semiconductors (Inficon), automation (Keyence, Cognex) and composite materials (Schweiter) among others.

Many of the industries we’ve invested in aren’t deeply cyclical, like natural food ingredients (Sensient, Frutarom), coffee (Strauss), medtech (Straumann), health insurance (United Health), animal health (Zoetis), payments (MasterCard) and many others.

When we’re negative about an industry, we don’t invest in it at all and assess the impact of negative developments in that industry on our other investments. We’re presently negative about commercial aerospace, automotive, energy and mining; therefore, we have no investments there at all. We’re also concerned about the extremely high valuation and lack of growth of companies in the utility, REIT and telecom industries and have no investments there.

Investors should consider whether they’re taking appropriate risks with respect to commodity prices, interest rates and currencies. Most investors don’t: they buy the index or use a closet index portfolio manager and take risks they don’t understand.

Simply put, we invest in companies we like and have no exposure to developments in the global economy that concern us. 

TOP PICKS

STRAUSS GROUP LTD (STRS IT)

Based in Petah Tikva, Israel, Strauss Group is a manufacturer of Middle Eastern salads and dips, coffee, water purification systems and sweets and salty snacks.

Coffee is one of the fastest-growing food categories. Strauss recently purchased full ownership of their coffee division, which is growing strongly in Eastern Europe and South America. The water division is growing strongly in Israel and Asia. The dips and spread business continues to be the North American market leader and has been expanding in Europe, Australia and New Zealand. The Israeli business is a leader in dairy, beverage and snack foods and participates in the strong growth of local consumption driven by immigration. 

KEYSIGHT TECHNOLOGIES INC (KEYS.N)

Santa Rosa, California-based Keysight provides electronic test equipment. The majority of their business supports wireless network and hardware development and deployment, which will benefit from the rollout of 5G wireless. They also provide equipment used in testing and developing microelectronics.

An important business segment is defence electronics; they’re one of small group of companies that provides equipment to test and design electronics used in defence applications. They also provide some hardware used for signals intelligence.

Originally founded by William Hewlett and David Packard Packard in 1939 as Hewlett-Packard, it spun out of Agilent in 2014.

JPMORGAN CHASE & CO (JPM.N)

Global financial services provider JPMorgan operates as a bank, investment bank, private bank, asset manager, custodian, lessor, factor, cash flow lender, asset-based lender and payment processor. They benefit from global scale most competitors lack, an information technology budget that exceeds the operating expenditures of many so-called fintechs, and a relatively accommodating regulator.

In an environment where deregulation and tax reform are spurring economic growth, bank asset growth is likely to pick up. Having one of the broadest exposures to lending, JPMorgan is able to provide whatever form of financing a client needs. The company traces its roots to the Manhattan Company, founded in 1799. 

PAST PICKS:  MARCH 27, 2017

BELIMO HOLDING AG (BEAN SW)

• Then: 3,351CHF
• Now: 4,230 CHF
• Return: 26.95%
• Total return: 28.95%

PARKER HANNIFIN CORP (PH.N)

• Then: $155.65
• Now: $184.27
• Return: 18.38%          
• Total return: 20.26%

KEYSIGHT TECHNOLOGIES INC (KEYS.N)

• Then: $36.52
• Now: $45.96
• Return: 25.84%
• Total return: 25.84%

Total return average: +25.01%

FUND PROFILE

Dynamic Global Dividend Series F
Performance as of Jan. 30, 2018

• 1 month: 4.1% fund, 3.1% index
• 1 year: 26.8% fund, 19.1% index
• 3 year: 14.6% fund, 11.1% index

* Index: MSCI World C$. Performance is total return and net of fees – Series F

TOP 5 HOLDINGS AND WEIGHTINGS

1. Frutarom Industries Ltd: 5.8%
2. Keyence Corp: 5.2%
3. JPMorgan Chase & Co: 4.8%
4. Raytheon Company: 4.8%
5. UnitedHealth Group Inc: 4.7%

Dynamic Global Dividend won a Fundata Canada Inc. FundGrade A+ Awards for 2017.

DISCLAIMER: Dynamic Global Dividend Fund Series F inception date March 2006. Portfolio Manager has been on the Fund since inception. Series F units are only available to investors who participate in eligible fee-based or wrap programs with their registered dealer. Commissions and trailing commissions are not payable on Series F units of the Funds but management fees and expenses may be associated with these investments. The indicated rates of return are the historical annual compound total returns including changes in unit values and reinvestment of all distributions does not take into account sales, redemption or option changes or income taxes payable by any security holder that would have reduced returns. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.

TWITTER: @dfingold
WEBSITE: dynamic.ca