In bank stocks he trusts

Why TD Dividend Growth's manager made the Big Five his top five.

Diana Cawfield 29 June, 2017 | 5:00PM

Doug Warwick, a managing director and portfolio manager with TD Asset Management Inc. in Toronto, is clearly undeterred by the downgrading of Canada's major banks by Moody's Investors Service in May. In fact, the Big Five banks are his top five recent holdings in the $7.2-billion TD Dividend Growth.

As reported this week on the TD Mutual Funds website, parent company  Toronto-Dominion Bank (TD) was the fund's top holding at 8.8%, narrowly ahead of the 8.7% weighting of  Royal Bank of Canada (RY).  Bank of Nova Scotia (BNS) was third at 7%, with  Canadian Imperial Bank of Commerce (CM) and  Bank of Montreal (BMO) at 6.7% and 6.5%, respectively. Collectively, they accounted for nearly 38% of the fully invested fund.

Why put so much stock in the fortunes of the Big Five? "The Canadian banks were always rated with about the highest ratings of banks around the world, so they were taken down a notch," says Warwick. "The important thing for me, is funding costs didn't change for the banks, so despite that downgrade, it was business as usual for the banks at no cost disadvantage."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Bank of Montreal70.52 CAD2.07
Bank of Nova Scotia57.20 CAD1.82
Canadian Imperial Bank of Commerce92.46 CAD1.91
Royal Bank of Canada93.64 CAD2.62
The Toronto-Dominion Bank60.79 CAD1.23

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.

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