David Fingold, vice president and portfolio manager at Dynamic Funds

Focus: North American and global stocks
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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 do not 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 Dynamic Global Discovery Fund, own 20 companies, while a more diversified portfolio like 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 25 company portfolios. 

When we own companies that are in cyclical industries, we have a positive medium-term view of the industry. The industries we presently like include, but are not limited to, defence (Raytheon, Elbit), construction (Belimo, GCP, Geberit), semiconductors (Inficon, KLA Tencor), automation (Keyence, Cognex), composite materials (Schweiter) and many others.

Many of the industries we have invested in are not deeply cyclical. They include, but are not limited to, natural food ingredients (Sensient, Frutarom), coffee (Strauss), medtech (Hoya, Danaher), health insurance (United Health), private banking (First Republic) and many others.

When we are negative about an industry, we do not invest in it at all and assess the impact of negative developments in that industry on our other investments. We are presently negative on commercial aerospace, automotive, energy, telecommunication and mining, and therefore we do not own any investments in these areas. We are also concerned about the extremely high valuation and lack of growth of companies in the utility, REIT and telecom industries, and therefore we have no investments in those sectors.

Investors should consider whether they are taking appropriate risks with respect to commodity prices, interest rates and currencies. Most investors do not. 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

SCHWEITER TECHNOLOGIES (SWTQ.SW)
Horgen, Switzerland-based Schweiter Technologies is a world leader in the production of foamed plastic and aluminum composites. They are used in construction, transportation, wind power and display. In the long run, these materials should outgrow alternatives because of their superior strength-to-weight ratio, insulating properties and recyclability. 

KEYSIGHT TECHNOLOGIES (KEYS.N)
Santa Rosa, California-based Keysight Technologies was founded in 1939 by Bill Hewlett and David Packard. It is the original business known as Hewlett Packard and achieved independence in 2014. They build electronic test equipment used by the wireless communication, semiconductor and defence electronics industries. We expect medium-term growth to be aided by the bright prospects for 5G wireless and defence spending. 

HOYA CORPORATION (7741.JP)
Tokyo-based Hoya Corporation is a leading producer of optical products. They are a leader in health sciences including endoscopes and lenses for vision correction. They also have a significant position in information technology. They dominate photomasks for the latest nodes of semiconductor manufacturing and hard disk platters for high-capacity drives. They have an excellent long-term record of capital allocation including acquisitions, dividend growth and share repurchases.
 

PAST PICKS: NOVEMBER 23, 2016

INFICON (IFCN.SW)

• Then: CHF 356.25
• Now: CHF 487.75
• Return: 36.91%
• TR: 41.18%

SMC CORPORATION (6273.JP)

• Then: ¥31,480
• Now: ¥33,830
• Return: 7.46%
• TR: 8.10%

BELIMO HOLDING (BEAN.SW)

• Then: CHF 2,990
• Now: CHF 4,093
• Return: 36.88%
• TR: 39.84%

TOTAL RETURN AVERAGE: 29.70%
 

FUND PROFILE: DYNAMIC GLOBAL DIVIDEND FUND – SERIES F

PERFORMANCE (TOTAL RETURN) AS OF MAY 31, 2017:

• 1 month: Fund 3.2%, Index* 1.0%
• 1 year: Fund 24.6%, Index* 20.7%
• 3 years: Fund 17.1%, Index* 14.3%

* Index: MSCI World Index
 

TOP HOLDINGS AND WEIGHTINGS

AS OF MAY 31, 2017:

1. Keyence Corp.: 5.7%
2. Belimo Holding AG: 5.4%
3. Frutarom Industries Ltd.: 5.4%
4. Elbit Systems Ltd. 5.3%
5. Schweiter Technologies AG: 4.9%

Dynamic Global Dividend Fund Series F’s inception date was March 2006. Portfolio manager has been on the Fund since inception. Series F units are available only 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
INSTAGRAM: @dlfingold
WEBSITE: dynamic.ca