Equity Fund

March 31, 2024

Market Context

• The Canadian stock market (Morningstar Canada Index) rose 6.8% in the first quarter. Energy, healthcare, and industrial stocks were areas of strength, while the telecom, utilities, and real estate sectors were weak
  
• Global stocks, as measured by the Morningstar Developed Markets Index, gained 11.4% in Canadian dollars.
  

Portfolio Specifics

• The portfolio consists of 26 stocks, of which 14 are headquartered in Canada, 10 in the U.S., and 2 overseas.
• The fund had a good quarter, with many of our companies turning in strong revenue and earnings growth. Top performers included new additions Loblaw Companies, Waste Connections and Otis Worldwide, as well as longstanding holdings Microsoft and RB Global. While technology stocks continue to be a key driver of returns in the U.S. market, the portfolio benefited from broader contributions by stocks in the industrial, consumer, and financial sectors.
  
• TD Bank, S&P Global, and Nestle lost ground, but each stock declined less than 5%. More importantly, the fundamentals of these businesses remain sound.
  
• We referenced last quarter some of the changes in the portfolio resulting from our new lead manager, Nessim Mansoor, taking over for Gord O’Reilly (both with Fiera Capital), who retired at the end of 2023. Nessim introduced seven new stocks in the first quarter, and the transition is now largely complete. The structure of the portfolio hasn’t been materially altered, with our focus still on market leaders that often ‘own’ a category. The fund does, however, have more exposure to consumer and technology businesses, and less in the resources and telecom sectors.
  
• Of the new additions, five are consumer related. McDonald’s is a name we all know. The company has incredible brand strength and has executed consistently over time, leading to strong financial results. Likewise, PepsiCo and Nestle are market leaders that dominate their category. Loblaw Companies, one of Canada’s leading grocers (and a stock we have previously owned), and TJX Companies, the premier discount retailer of apparel and home fashions, were also added.
  
• Industrial firms Otis Worldwide (manufactures and maintains elevators, escalators, and moving walkways) and Waste Connections (solid waste collection) rounded out the purchases. To fund the new holdings, Franco-Nevada, CCL Industries, Telus, Aon, Sika, and Nutrien were sold.
  

Positioning

• The fund is comprised of a concentrated group of best-in-class businesses operating in a range of industries with solid long-term demand profiles. Focus is on market leaders that generate steady profits and have proven leaders at the helm.
  

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.