James Cole

Having trouble finding investments for his heavy cash position.

Michael Ryval 10 January, 2003 | 2:00PM
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James Cole is uneasy about the Canadian equity market rebound since early October. So much so, that he is reluctant to invest some of the nearly 50% cash in the $87-million AIC Canadian Focused that he has managed since its inception in August 2000. "I've been having trouble finding investments that meet my criteria," says Cole, a senior vice-president at Burlington, Ont.-based AIC Ltd.

Companies must meet five criteria to merit inclusion in the fund. They must be in a growth industry that is increasing its share of gross domestic product. They must have a history of superior profitability, a strong financial position, and be available at an attractive price that offers 15% annual returns over a five-year or longer holding period. Finally, they must have limited downside risk.

Cole's high cash holdings have contributed to the fund's top-quartile return over the past two years in a declining market. "There is a lot of pickiness involved, which has made things difficult," he admits, adding that the cash level has been 50-70% since April 2001.

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Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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