Equity Fund

March 31, 2021

Market Context

  • The Canadian stock market (S&P/TSX Composite Index) rose 8.1% in the first quarter. Energy and financial stocks were key contributors to the robust return.
  • Global stocks, as measured by the Morningstar Developed Markets Index, gained 3.8% in Canadian dollar terms.

Portfolio Specifics

  • The fund holds 23 stocks, of which 12 are headquartered in Canada, 6 in the U.S., and 5 overseas.
  • The fund had a flat start to the year following a strong 2020. In general, it was a quarter where companies with weaker balance sheets and more economically-sensitive businesses, including resource stocks, outperformed. The portfolio has a greater focus on high-quality companies and only modest exposure to resources.
  • Top performers included CCL Industries, which is a specialty packaging firm and the largest label maker in the world, and two financial services companies, TD Bank and CME Group.
  • Conversely, two holdings that have been stellar longer-term performers gave back some gains in the quarter, Ritchie Brothers Auctioneers and Keyence. Both remain excellent companies, nonetheless.
  • The manager, Fiera Capital, added to a few positions in the healthcare field including Danaher and Philips. Novartis, a pharmaceutical manufacturer and longtime holding, was sold as the company could face ongoing drug pricing challenges and Fiera feels that Danaher and Philips have better long-term prospects.
  • Alimentation Couche-Tard was also sold. The convenience store operator attempted to buy French grocer/retailer Carrefour but ran into opposition from the French government. Fiera viewed this move as a departure from Couche-Tard’s core strategy and a strike against management.
  • One new holding was added to the portfolio, Aon, a British professional services firm. The company is a leading commercial insurance broker that also offers retirement solutions and consulting services. Aon’s businesses exhibit low cyclicality, are not capital intensive, and generate strong cash flows. These defensive characteristics make it an attractive addition to the portfolio.
  • The fund currently has a cash position of 3%.

Positioning

  • The fund is comprised of a concentrated group of businesses operating in a diverse array of industries, from railroads to packaging to renewable energy to software. The manager’s focus is on best-in-class companies that generate strong cash flows, have good growth prospects, and are well financed.

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.