Why Invest?
Reasons to own the Pender Corporate Bond Fund
1. Fixed Income Specialist
Matt Shandro is the advisor to the Pender Corporate Bond Fund and has over 15 years of experience in fixed income markets. He is a former portfolio manager at CI Investments and Marret Asset Management, prior to which he worked as a high yield analyst at Vancouver-based Deans Knight.
2. Award Winning Manager
Mr. Shandro co-managed the multi-billion dollar CI Signature High-Income Fund between 2003 and 2006. In 2004 the fund was named “Canadian Income Trust Fund of the Year”*.
3. Opportunity: Access
Investors have access to an expert manager, who himself has access to a wide network of bond traders, built up over 15 years. This includes smaller issues ($50-150 million in size) which are unavailable to retail investors and unworkable for larger fund managers who can’t own enough to make a difference in their fund.
4. Opportunity: Structure
The fund is small and nimble and without the structural impediments of others, meaning the manager can be selective and make decisions based primarily on investment merit, including price. Bigger fund managers are the market for large issues and have to buy at the prescribed price.
5. Management Discipline
Mr. Shandro is a credit analyst and employs a very different approach to the rating agencies. He uses a fundamental bottom-up approach to investing, focusing on issuers with robust free cash flow and/or assets. By exercising this discipline he can take advantage of both the inefficiencies in the fixed income markets and mis-ratings by the agencies.
6. Avoid Over-Diversification (“Diworsification”)
The fund aims to hold between 25 and 40 names in the portfolio to best drive performance. We believe this provides investors with a sufficient level of diversification, and avoids over-diversification which can lead to performance dilution.
7. Margin of Safety
Through fundamental analysis the manager can identify issuers with strong free cash flow, hidden asset value and/or liquidity options that create a “margin of safety”. Also, in the event of a liquidation event, debt has a higher ranking in the corporate capital structure than stocks.
8. Alignment
Mr. Shandro and principals at Pender have made personal investments in the Fund. We are owners too.
9. Value
The manager has a conservative approach and aims to preserve capital first, only paying out what the fund earns, not return of capital. His goal is to then generate significant risk-adjusted returns.
* Morningstar Canadian Investment Awards http://208.97.115.211/awards/winners/2004