Equity Fund

September 30, 2018

Market Context

  • The Canadian stock market (S&P/TSX Composite Index) fell 0.6% in the quarter on weakness in resource stocks. Cannabis and industrial stocks were areas of strength.
  • Global stocks, as measured by the Morningstar Developed Markets Index, gained 2.8% in Canadian dollar terms.

Portfolio Specifics

  • The Equity Fund has been managed since inception by the CGOV team at Fiera Capital. CGOV was merged into Fiera earlier this year. Last month, we posted a blog detailing our assessment of the ownership change. Our conclusion: “We continue to see the characteristics we like in a manager: a focused team with experienced decision makers and a proven, disciplined investment process.”
  • The fund holds 25 stocks, of which 14 are headquartered in Canada, 5 in the U.S., 5 overseas and 1 in Mexico.
  • The portfolio had a positive quarter. Most of the gainers were U.S.-based, including CVS Health, Starbucks and Visa, while the laggards were in Canada. The trade uncertainty around the automotive industry weighted on Magna International, and Franco-Nevada and CCL Industries were also weak.
  • Two new holdings were added: Dollarama, a Canadian budget-oriented retailer; and Maxar Technologies, a satellite manufacturer. Dollarama saw its stock price take a pause in 2018, which brought the valuation into the manager’s (Fiera Capital) buy range. The company has a high return on capital, and despite its rapid store expansion, still has plenty of opportunity to grow. Vancouver-based Maxar (formerly MacDonald Dettwiler) also has a history of success and technological leadership, but its stock price has been under pressure. Controversial acquisitions, increased debt levels and leadership changes have taken the luster off the company. Maxar continues to be a global leader in satellite technology and holds a valuable set of assets. With short sellers pounding the stock down, Fiera took an initial position.
  • To make room for Dollarama and Maxar, Loblaw Companies was eliminated after a successful run in the portfolio. The small position in Enbridge was also sold after it had gained back some of the ground it lost earlier in the year.
  • The fund currently has a cash position of 6%.


  • All but a few of the fund’s holdings are growing their profits and dividends. The focus is on businesses that have proven to be resilient through the economic cycle.
  • The fund has exposure to a mix of industries and geographies. The diversification, however, comes from owning a group of unique businesses, including a few that tend to behave differently than the market, including CBOE and Franco-Nevada (gold).