Equity Fund

December 31, 2018

Market Context

  • The Canadian stock market (S&P/TSX Composite Index) fell 8.9% in 2018. Resource stocks were a notable area of weakness as the price of oil dropped to its lowest level in almost three years.
  • Global stocks, as measured by the Morningstar Developed Markets Index, declined 1.2% in Canadian dollar terms.

Portfolio Specifics

  • The fund holds 24 stocks, of which 12 are headquartered in Canada, 5 in the U.S., 6 overseas and 1 in Mexico.
  • The fund declined 3.9% in 2018. The portfolio held up well in a down year, all things considered. A few holdings even turned in solid gains, including Ritchie Bros. Auctioneers, Experian, Starbucks, Visa and CAE.
  • It was a tough year, however, for the fund’s energy holdings, notably Suncor Energy and PrairieSky Royalty, as the price of oil fell 25%. Of note, the fund has much less exposure to energy-related companies (12% of the portfolio) than the Canadian index, which helped performance.
  • As the market pulled back in the fourth quarter, the manager (Fiera Capital) started to see some compelling opportunities. Two European stocks were purchased, Sika and Chr. Hansen. Sika is a Swiss specialty chemical maker with a focus on the construction industry. It has an impressive record of innovation and stands to benefit from the growth of megacities. Chr. Hansen is a Danish bioscience company that develops enzymes for the food, pharmaceutical and agricultural industries.
  • Marathon Petroleum was also purchased late in the year. Marathon is the largest petroleum refiner in the U.S. (following an acquisition in October). The company generates tremendous cash flow and operates an attractive gas station chain (Speedway). Fiera also likes Marathon because they believe it’s well positioned to benefit from new standards for cleaner marine fuel coming into play in 2020
  • Ecolab and Unilever were sold. Both are fantastic businesses, but reached full value in Fiera’s view. Maxar Technologies was also sold, but under less favourable circumstances — Fiera lost faith in the company’s management.
  • The fund currently has a cash position of 6%.


  • The fund is comprised of two dozen businesses operating in a diverse array of industries, from railroads to packaging to construction to enzyme production. Focus is on best-in-class companies that generate strong cash flows, have good growth prospects, are well financed and have proven leaders at the helm.