Equity Fund

March 31, 2022

Market Context

  • The Canadian stock market (S&P/TSX Composite Index) rose 3.8% in the first quarter. The energy and commodity sectors were key areas of strength.
  • Global stocks, as measured by the Morningstar Developed Markets Index, declined 6.3% in Canadian dollar terms.

Portfolio Specifics

  • The fund holds 24 stocks, of which 12 are headquartered in Canada, 7 in the U.S., and 5 overseas.
  • The portfolio was steady in a volatile quarter, especially considering it doesn’t own any oil & gas stocks (the sector gained nearly 30%). Our Canadian investments (53% of the fund) hung in well, with fertilizer producer Nutrien being a standout, up 35%. The issue of food security gained prominence in the wake of the situation in Russia and Ukraine (both are large exporters of wheat and corn), and agriculture-related stocks got a boost. Franco-Nevada (gold), Metro (grocery retailer), Brookfield Renewable Partners (renewable power), and CN Rail also did well.
  • Overseas stocks had more of a challenging period. Sika (specialty chemicals), Keyence (automation sensors), and Experian (credit reporting services) were down roughly 20%. Our manager, Fiera Capital, viewed the price declines as an opportunity to add to our holdings in three first-rate companies.
  • Our U.S. investments were mixed. CBRE (commercial real estate services), S&P Global (financial information and analytics), and Danaher (science and technology innovator) were down more than 10%. Visa (payment services) and CME Group (derivatives marketplace), on the other hand, were up modestly.
  • As is often the case, volatility leads to opportunity, and Fiera bought two new companies in the quarter. Zoetis is the world’s largest producer of medicine and vaccinations for pets and livestock. Fiera likes the business because pet ownership has increased steadily over the past several years, and the company is innovative in bringing new products to market. CNH Industrial makes agriculture and construction equipment. The company has been a steady grower, has a strong order book, and is well positioned to benefit from a shift towards precision agriculture (farming that uses more technological innovations).
  • Verisign (internet infrastructure) and Koninklijke Philips (health technology) were sold to pursue better opportunities.

Positioning

  • The fund is comprised of a concentrated group of businesses operating in a diverse array of industries, from information services to renewable energy to packaging 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.