Sprott Diversified Yield Fund
Investment Team
Scott Colbourne
Co-Chief Investment Officer; Senior Portfolio ManagerScott Colbourne
Co-Chief Investment Officer; Senior Portfolio Manager
Scott joined Sprott Asset Management LP in March 2010 and brings over 24 years of global fixed income and currency market experience to the firm. Earlier in his career, Scott was senior Vice President and Portfolio Manager at AGF Funds Inc. where he managed all fixed income mandates and co-managed the balanced funds. Scott was also a managing director and partner at a Canadian hedge fund focusing on global fixed income and currency management. Prior to joining Sprott, Scott was a Senior Portfolio Manager at TD Asset Management, where he was part of the team responsible for $30 billion of fixed income portfolios.
Scott began his career at the Bank of Canada where he worked in both research and trading, which assisted in the execution of monetary policy. He is a four-time winner of the Best Foreign Bond Fund at the Morningstar Canadian Investment Awards.
Scott is a CFA Charter holder and has an MBA from University of Toronto and an Honours BA from Queens University.
Michael Craig
Portfolio ManagerMichael Craig
Portfolio Manager
Michael Craig joined Sprott Asset Management LP in May 2010 and brings 12 years of experience developing fixed income analytics, tactical asset allocation and fixed income management. Earlier in his career, Michael worked at Phillips, Hager and North, where he developed the analytics and research systems used by the fixed income team.
Prior to joining Sprott Michael was a Vice President at TD Asset Management. There, he co-managed over $11 billion in assets for various asset allocation programs, and led the portfolio analytics group.
Michael obtained his Masters in Financial Risk Management from Simon Fraser University (2006) and his Bachelor of Commerce from the University of British Columbia (1999). Michael is a CFA charterholder.
Ben Chim
Portfolio ManagerBen Chim
Portfolio Manager
Ben joined Sprott Asset Management LP in May 2011 as an Associate Portfolio Manager and was appointed Portfolio Manager in April 2013. He has over ten years of experience in bond and credit analysis. Ben began his career at DBRS as a credit analyst where he analyzed bonds for various industries across the credit spectrum. Most recently, he was a Vice-President at TD Asset Management. There, he was a member of the team responsible for all of the firm’s active high yield assets, including the TD High Yield Bond Fund. From 2006 to 2008, Ben was an Investment Analyst at CI Investments Inc. where he was part of a team that managed all active high yield fixed income assets in the Signature Funds group.
Ben is a CFA charterholder and obtained his Bachelor’s degree from the University of Western Ontario.
Fund Details
| Fund Status | Open |
| Distributions | Income and Capital Gains Distributed Monthly/Annually (if any) & Reinvested Automatically. Monthly Cash Distributions (T) |
| Fund Code |
SPR - 018 (A) |
| Inception Date | 8/5/2010 |
| Nature of Securities | Mutual Fund Trust Units |
| Type of Fund | Diversified High-Yield Fixed Income Fund |
| Valuations | Daily |
| Redemptions | Daily |
| Minimum Initial Investment | $1,000 CDN |
| Minimum Subsequent Investment | $100 CDN |
| Minimum Investment Term | 60 days (1.5 % penalty) |
| Management Fee | 1.65% annual - (A) 1.65% annual - (T) 1.00% annual - (F) |
| Performance Fee | 10% of excess over blended benchmark index (75% of daily return of Bank of America Merrill Lynch US High Yield Index; 25% of daily return of DEX Universe Bond Index) |
| Eligible for Registered Plans | Yes |
| Investor Risk Tolerance | Medium |
Fund Objective
The Fund's investment objective is to maximize the total return of the Fund and to provide income by investing primarily in debt and debt-like securities of corporate and government issuers from around the world.The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.
Q4 Market Commentary
The Sprott Diversified Yield Fund Series A (the “Fund”) generated another quarter of positive returns, gaining 2.21% during the fourth quarter.
Throughout the quarter, we continued to see examples of the relentless Central Bank easing that is taking place globally and the corresponding financial repression that these activities are imparting upon their constituents.
The negotiations around the U.S. fiscal cliff were the central preoccupation of the markets in November and December, as Congress found it predictably difficult to reach an accommodation that prevented automatic tax hikes and spending cuts from kicking in on January 1, 2013. Seeing little progress on these negotiations, we were well positioned for the sell-off that occurred at the end of December as a deal appeared unlikely. Despite the year-end decline, “risk” assets (FX, credit and equities) performed well on the quarter and the Fund benefited from our high-yield and emerging markets bond weightings, as well as our individual credit picks.
With the fiscal cliff deal now in place, the spotlight turns to the latest in a seemingly never-ending series of policy events – the U.S. debt ceiling debates and inflationary Japanese monetary policies. As a result, we expect the markets to be range bound over the next few months and we continue to structure our funds with a modestly constructive bias to “risk” assets such as credit, emerging markets bonds and pro-risk currencies.
Going into 2013, on the credit side, we have increased our exposure to Venezuela, which we expect to be a strong performer this year as Hugo Chavez’s declining health contributes to lower political risk in that country. In foreign exchange, we are long Mexico against Canada.
Financial repression is a theme that we have often discussed with our clients, and continues to underpin our comfort around the persistence of the current low interest rate environment and a substantial allocation to corporate bonds and specifically high-yield bonds in our funds.