# Mawer Balanced Fund MAW104 distribution correction



## jdc (Feb 1, 2016)

Wow,

Big mistake by Mawer making a distribution that they shouldn't have. at the end of January for MAW104. It showed up in my brokerage account and now they need to reverse the distribution paid... What a mess.

An explanation is on the daily prices page today:
http://www.mawer.com/our-funds/daily-prices/


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## zylon (Oct 27, 2010)

Thanks for the update *jdc*

- and welcome to this Fine Financial Forum !

------------------------------
Not related to anything:


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## james4beach (Nov 15, 2012)

Regarding MAW104 (their flagship Balanced Fund), I've started considering this as something to suggest for some family members. We have our own ETF portfolio and currently RBC Monthly Income has been the "one to beat". If our own portfolio doesn't beat or exceed the risk/reward of RBC Monthly Income, or Mawer Balanced Fund, then I can see the case for going with the mutual funds.

Mawer publishes a daily price document:
http://www.mawer.com/assets/Daily-Report.pdf

Does anyone know what exactly the *Total Return Index* column shows? Can I use this number to easily calculate total return (including all distributions) as ending index divided by starting index? If so, this would be a great way to compare performance to my own portfolios.


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## dubmac (Jan 9, 2011)

james4beach said:


> Does anyone know what exactly the *Total Return Index* column shows?


They respond very quickly to email - I suggest you send them an email regarding this question - you will get a prompt reply.


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## james4beach (Nov 15, 2012)

james4beach said:


> Mawer publishes a daily price document:
> http://www.mawer.com/assets/Daily-Report.pdf
> 
> Does anyone know what exactly the *Total Return Index* column shows? Can I use this number to easily calculate total return (including all distributions) as ending index divided by starting index? If so, this would be a great way to compare performance to my own portfolios.


The responses from Mawer told me that yes, you can use this Total Return Index to calculate total return with a simple end/start calculation.

That's pretty nice for benchmarking


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## humble_pie (Jun 7, 2009)

james4beach said:


> Regarding MAW104 (their flagship Balanced Fund), I've started considering this as something to suggest for some family members.



james if you're considering Mawer balanced in non-registered accounts for the 'rents, might i suggest that you consider the tax-effective version?

the underlyings are more or less the same, except that the tax effective owns the stocks outright, whereas plain mawer balanced owns other mawer funds that own the underlyings. So the tax effective fund is considerably more transparent, imho.

i'd be interested to know what differences you see in the relative performances. The Mawer tax effective should have a somewhat lower distribution, which when combined with lower taxes should give investors in this fund a return that equals or surpasses the after-tax income of the Mawer balanced.

it's difficult to find out how the Mawer tax effective fund works. I had to listen to their video, where the fund manager briefly explains what he does to avoid taxable capital gains. Because it's something that i do myself, the strategy then became easy to understand.

there will be little or no distributed capital gains. Much of the interest & dividend income will be absorbed as fees by Mawer. The result is the kind of fund model that i believe you prize so much - low distributed income but best chance for capital appreciation within the fund.


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## james4beach (Nov 15, 2012)

Interesting. They're not considering buying this right now, but I'd like to start comparing the ETF portfolio that I designed for my parents versus a Mawer balanced fund.

Previously I was benchmarking against CIBC Monthly Income (which is a balanced fund). The parents' ETF portfolio has been steadily beating it for nearly 9 years now, but maybe that's not too difficult to achieve and perhaps that gave me an inflated sense of success.

RBC Monthly Income _does_ exceed their portfolio's returns, and Mawer does too. But I want to collect more granular data to see how the competing funds fare during rough times, so I want to start gathering data on things like drawdown and worst periods.

As you can guess humble_pie, I have a bearish leaning. The portfolio I put together for them has done pretty well in bear phases without compromising bull market performance. For example from 2015-02-06 to now:

CIBC Monthly Income: -8.5%
RBC Monthly Income: -6.3%
*Parents ETF portfolio: -3.6%*
Mawer Balanced Fund: +1.7%

I'd call that pretty good in 1 year that's been brutal for most, and they're beating the RBC fund. But I'm really mystified by this Mawer performance.


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## capricorn (Dec 3, 2013)

james4beach said:


> I'd call that pretty good in 1 year that's been brutal for most, and they're beating the RBC fund. But I'm really mystified by this Mawer performance.


Isn't that because of USD allocation in Mawer balance?


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## Walksing (Oct 16, 2012)

could you kindly share your Parents ETF portfolio? thanks



james4beach said:


> Interesting. They're not considering buying this right now, but I'd like to start comparing the ETF portfolio that I designed for my parents versus a Mawer balanced fund.
> 
> Previously I was benchmarking against CIBC Monthly Income (which is a balanced fund). The parents' ETF portfolio has been steadily beating it for nearly 9 years now, but maybe that's not too difficult to achieve and perhaps that gave me an inflated sense of success.
> 
> ...


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## james4beach (Nov 15, 2012)

Walksing said:


> could you kindly share your Parents ETF portfolio? thanks


Sure. Here are the current allocations, 60% equity, 28% fixed income, 12% precious metals.

31% XIC
10% XSP
19% BRK.B
12% CEF.A
28% XSB (actual: 12% govt bonds, 12% xsb, 4% hisa... call it "XSB")

Since inception in 2007, the greatest returns came from the following from best to worst: BRK.B, CEF.A, XSP, XSB, XIC.

I still really like this portfolio, but I'm no longer a fan of currency hedging (XSP is hedged S&P 500). A non-currency hedged US index would have been better, either ZSP, XUS, VFV. Additionally I would consider diversifying the precious metals holdings between CEF.A and MNT.


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## james4beach (Nov 15, 2012)

For those who may be curious about the above portfolio's 10 year performance. Caveats: this is not a 50/50 balanced fund & this is theoretical performance if this allocation had been constant throughout, which it hasn't been. Notably there used to be XIN exposure, which we threw away. Assuming a portfolio with the above allocations:

10 year average annualized
RBC Monthly Income: 4.21%
RBC Canadian Dividend: 4.61%
TD Monthly Income: 4.66%
*Parents ETF portfolio: 5.36%*
Mawer Balanced Fund: 7.43%


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## james4beach (Nov 15, 2012)

james4beach said:


> Walksing said:
> 
> 
> > could you kindly share your Parents ETF portfolio?
> ...


Now I'm able to better compare performance to Mawer's using their daily data.

Since February 1, my parents portfolio (above) is up 4.0% whereas MAW104 is flat, 0%. Obviously this is a very short time period but I'm interested in watching this going forward.


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## james4beach (Nov 15, 2012)

james4beach said:


> Sure. Here are the current allocations, 60% equity, 28% fixed income, 12% precious metals.
> 
> 31% XIC
> 10% XSP
> ...


FYI, our portfolio is beating Mawer Balanced YTD (up to Aug 5). MAW104 is +3.4% so far, and the above portfolio is +10.2%. The parents are happy.


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## dubmac (Jan 9, 2011)

MAW104 consists of several MAWER equity funds. It is true that MAW102 (cdn equity) and MAW106 (int equity) and MAW120 (global equity) have _all_ under performed their benchmarks over the past 3-6 months.
Their long term performance has been nonetheless very impressive for these (and other) Perhaps the managers (Hall) were more defensive -spooked by all of the headlines (Brexit and others). 
106 is light on financials and energy (as ALTARED points out in a separate thread). 
If cdn banks go south - XIC may well stumble. XIC has 30% financials (to 15% MAW106). 
Perhaps the MAWER managers see cdn financials, as some predict due to hot housing & bubbles reports, as being in bubble territory. Not sure.


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## OnlyMyOpinion (Sep 1, 2013)

MAW106 (Cdn Eq) also lacks any gold exposure.

_"our underlying philosophy and approach remain the same: buy wealth-creating companies, run by good people, at attractive valuations, and construct diversified, resilient portfolios that can ride out the inevitable storms that will pass through."_ http://www.mawer.com/insights/newsletters/investment-newsletter-2q16

Just because my own portfolio has performed 3x better than MAW104 YTD doesn't suddenly mean I'm a whiz and they are dummies. Quite the opposite. I'll continue to keep a reasonable slice invested with them.


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## dubmac (Jan 9, 2011)

OnlyMyOpinion said:


> MAW102 also lacks any gold exposure.
> I'll continue to keep a reasonable slice invested with them.


me too. I like their approach and their products.


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## james4beach (Nov 15, 2012)

Don't get me wrong, I think MAW104 is quite amazing. I've looked very hard to find flaws in it, and I can't find any. It's one of only 2 or 3 mutual funds that I can honestly recommend to anyone who asks.


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## dubmac (Jan 9, 2011)

some good reflection here on investing from the folks at Mawer. http://artofboring.com/market-overv...tm_campaign=BLOG+-+Judging+History+2016-08-10


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## christinad (Apr 30, 2013)

dubmac said:


> MAW104 consists of several MAWER equity funds. It is true that MAW102 (cdn equity) and MAW106 (int equity) and MAW120 (global equity) have _all_ under performed their benchmarks over the past 3-6 months.
> Their long term performance has been nonetheless very impressive for these (and other) Perhaps the managers (Hall) were more defensive -spooked by all of the headlines (Brexit and others).
> 106 is light on financials and energy (as ALTARED points out in a separate thread).
> If cdn banks go south - XIC may well stumble. XIC has 30% financials (to 15% MAW106).
> Perhaps the MAWER managers see cdn financials, as some predict due to hot housing & bubbles reports, as being in bubble territory. Not sure.


According to morningstar, mawer international equity is outperforming the benchmark year to date by 5.8. Where did you see it is lagging?


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## humble_pie (Jun 7, 2009)

dubmac said:


> ... If cdn banks go south - XIC may well stumble. XIC has 30% financials (to 15% MAW106).
> 
> Perhaps the MAWER managers see cdn financials, as some predict due to hot housing & bubbles reports, as being in bubble territory. Not sure.



dubmac i'm not a mawer client like yourself so don't tend to follow their reports.

it's easy to see why, early on, they might have worried about the energy sector. But their avoidance of finance is surely not a recent thing, ie surely it is not Brexit related. 

would you be able to let us know what mawer's real cautions in finance have been? it's more likely that these are related to perceptions of a housing bubble, i would think.

it's interesting that all the critical problems in alberta - ongoing for more than a year now - plus the recent introducton of real estate taxes for foreign buyers have not yet served to crimp the canadian banking sector. Last i looked it was still surging. IE an avoid-banks policy has not, to date, paid off very well. Although it may going foward.

.


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## dubmac (Jan 9, 2011)

humble_pie said:


> But their avoidance of finance is surely not a recent thing, ie surely it is not Brexit related.
> I would you be able to let us know what mawer's real cautions in finance have been? it's more likely that these are related to perceptions of a housing bubble, i would think.


Hi HP. Apparently much of the avoidance in cdn financials _is_ Brexit related. 
I called Mawer and asked a few questions. They have lightened their position in banks because they see more negative consequences than positive surrounding the impact of Brexit on banks in the near and medium term (my words near and medium). 
I asked about whether housing bubbles influenced their decision, but the response seemed to be directed less around the speculation of a bubble, and more pointed to their investment philosophy - that being "bottom-up" investing and holding companies for a long duration (avg 7.5 years). (The gentleman on the phone was young-not likely a key decision maker). They like the industrial and consumer for their balance sheets - they have a "formulaic" method of choosing companies - thus oil companies, and I will suggest banks (more recently), have not met their criterion - whatever their criterion may be! The conversation also included a metaphor with the economy being likened to a baseball game -and we are in the 9th inning! I asked whether they were preparing for a correction, and he was vague in his response (not surprising).
Their HQ are in Calgary (oil, oil everywhere - and RE on the slide) and they seem not affected by that they see happening in Calgary (ie: not buying vast amounts of energy shares) - or maybe they are influenced by it! 
Not much of an answer to your question - but a glimpse.

@christinad - my error in stating that int eq. (102) had sub-performed. Their Q2 report came out after I made that remark.


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## OnlyMyOpinion (Sep 1, 2013)

I don't consider MAW106 (Cdn equity) to be light on banks. Financials are 22% (benchmark is 29%). Their top 5 holdings include TD (4.6%), RY (4.2%), and BNS (3.7%), as well a BAM.A, CCL.B. As noted above, they are light on O&G and golds which was the main reason for underperforming on a YTD basis.
http://quote.morningstar.ca/QuickTakes/fund/PortfolioOverviewHoldings.aspx?t=0P00007173&region=CAN&culture=en-CA


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