Recommended by David Paterson.
This has been one of the best performing small cap funds available in Canada since 2009, gaining an annualized 22.5% for the past five years. As impressive as that has been, it has really struggled so far this year, losing 7% on a year to date basis, after dropping 13.5% since September 1.
There are a couple of reasons for this big drop. First, the fund focuses solely on very small companies with market caps of less than $350 million. When markets get volatile, investors tend to flee small, more illiquid names in favour of higher quality companies.
Second, it had more than 35% invested in energy at the end of June. With increasing supply from the Middle East and worries over global demand, the price of oil has been in a tailspin, bringing this fund with it for the ride.
Despite the recent troubles, I believe that this can be a great small cap fund for those with an above average risk tolerance.
Fund Company: Franklin Templeton Investments
Style: Small Cap Value
Minimum Investment: $500
RRSP/RRIF Suitability: Fair
Interactive Performance Chart