January - Early Edition - CI Investments

Spotlight James DutkiewiczAbout 43% of the fund is corporate credit, versus roughly26% for the benchmark. All of the credits in the mandateare investment grade. The fund is rounded out with 38% infederal government securities, 15% in provincial governmentbonds and the balance in cash.“In terms of the corporate credits, we own a fair amount ofU.S. financials,” Mr. Dutkiewicz points out. “We hold theU.S banks, J.P. Morgan, Wells Fargo, and Bank of AmericaMerrill Lynch. Also, recently, we’ve been buying a lot of thegrocery store chains, including Loblaw. We didn’t own any ofit two years ago.”Signature Corporate Bond FundSignature Corporate Bond Fund is a blend of asset classes.It can invest in investment-grade bonds across the maturityspectrum, based on Mr. Dutkiewicz’s direction, or it caninvest in high-yield corporate bonds, under the direction ofGeof Marshall, who heads Signature’s high-yield team. Thefund’s third lead manager is John Shaw, who concentrateson international credit analysis, corporate bonds andpreferred shares.In terms of positioning, the fund began 2010 with a60% allocation to investment grade and 40% in high yield.“It’s currently flipped around. It’s now 60% high yield andjust under 40% in investment grade,” says Mr. Dutkiewicz.“That reflects our growing confidence about the recovery.When we lend money to companies in the high-yield spacewe get a greater yield than investment grade. Our averagerating in the high-yield portion of the portfolio is singleB high to double B low, slightly higher quality than the highyieldbenchmark. Our modus operandi in high yield is tobuy good companies. We don’t buy distressed debt. We don’ttry to catch falling knives or falling pianos. We want to buycompanies that we think are going to be successful.”And by shifting exposure away from investment grade,Mr. Dutkiewicz says, Signature is reducing duration orinterest rate risk. The average maturity of the corporate bondfund is less than five years.8 WINTER 2011 EARLY EDITION PERSPECTIVE AS AT DECEMBER 31, 2010