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CI Canadian Income Fund Series A (CIG50217 $18.36)
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RBC Canadian Equity Income Fund Series D (RBF1018 $42.89)
Q: Retired, dividend-income investor. I have two legacy mutual funds...RBC Canadian Equity Income Fund...series D, with a MER of 1.04% and Sentry Canadian Income Fund with a MER of 2.35%. I have owed each for just over 9 years. My original thesis was to have some professional management look after some of my portfolio with the goal of consistent dividend income and some growth of capital. I have just over 5% of the equity portion of my portfolio in each of them.
Periodically I review their performance....the thinking being that as long as they are meeting my investment goals, then the higher MER may appear worthwhile. Here is my methodology, albeit very simplified...does it make sense to you?
I took my unrealized capital gains directly from RBC Direct Investing and divided it by the holding period to create the average annual return of the capital. Then I took the dividend yield and netted out the average ROC to create a "net dividend yield". Add the two together to create the Total Return.
Example: Sentry = 42.14% unrealized CG divided by 9.17 years = 4.6%/yr. Gross dividend of 5.1% netted down by 24% average ROC creates a net dividend of 3.9%. Total Return = 8.5%/year.
For RBC = 7.4%/year (3.6% + 3.8%).
When I look at the posted RBC-5 yr (8.3%) and 10 yr (7.9%) averages, my calculation looks low, but within reason. When I look at the Sentry-5 yr (5.6%) and 10 yr (7.2%) averages, my calculation looks high. Since the original purchases, there were no additional funds added. I have trimmed each position once.
Question #1 = I know you can shoot holes through this, but from a "very ballpark" laymen's point of view, does my methodology make sense? I understand I only used "simple" averages, not "time-weighted" averages.
Q#2 = I had to create my own average for ROC. I went back through my income tax receipts which showed how the distributions were broken down into CG, Dividend, Interest income, ROC. It was actually pretty easy to do. Then I simply averaged them. For the RBC fund, the simple average since 2013 = 6% ROC. For Sentry = 24% ROC. Does your data base show any better data on a longer term average ROC...long shot, but I thought I'd ask. My data only goes back to 2013.
Q#3 = should I have ignored the ROC issue? In real simple terms I wanted to compare the capital invested versus dividends received + capital received (if I was to sell out).
Thanks for your help...much appreciated...Steve
Periodically I review their performance....the thinking being that as long as they are meeting my investment goals, then the higher MER may appear worthwhile. Here is my methodology, albeit very simplified...does it make sense to you?
I took my unrealized capital gains directly from RBC Direct Investing and divided it by the holding period to create the average annual return of the capital. Then I took the dividend yield and netted out the average ROC to create a "net dividend yield". Add the two together to create the Total Return.
Example: Sentry = 42.14% unrealized CG divided by 9.17 years = 4.6%/yr. Gross dividend of 5.1% netted down by 24% average ROC creates a net dividend of 3.9%. Total Return = 8.5%/year.
For RBC = 7.4%/year (3.6% + 3.8%).
When I look at the posted RBC-5 yr (8.3%) and 10 yr (7.9%) averages, my calculation looks low, but within reason. When I look at the Sentry-5 yr (5.6%) and 10 yr (7.2%) averages, my calculation looks high. Since the original purchases, there were no additional funds added. I have trimmed each position once.
Question #1 = I know you can shoot holes through this, but from a "very ballpark" laymen's point of view, does my methodology make sense? I understand I only used "simple" averages, not "time-weighted" averages.
Q#2 = I had to create my own average for ROC. I went back through my income tax receipts which showed how the distributions were broken down into CG, Dividend, Interest income, ROC. It was actually pretty easy to do. Then I simply averaged them. For the RBC fund, the simple average since 2013 = 6% ROC. For Sentry = 24% ROC. Does your data base show any better data on a longer term average ROC...long shot, but I thought I'd ask. My data only goes back to 2013.
Q#3 = should I have ignored the ROC issue? In real simple terms I wanted to compare the capital invested versus dividends received + capital received (if I was to sell out).
Thanks for your help...much appreciated...Steve
