Global Equity Fund

March 31, 2021

Market Context

  • Global stocks, as measured by the Morningstar Developed Markets Index, were up 3.8% in Canadian dollar terms in the first quarter.
  • Companies benefiting from an opening up of the global economy saw the biggest gains. The energy, financial and industrial sectors enjoyed double-digit returns.

Portfolio Specifics

  • The fund holds 44 stocks, of which 17 are based in the U.S., 15 in Europe, 7 in the U.K., 4 in Asia, and 1 in Canada.
  • The portfolio has seen a strong rebound over the past 12 months. Many of its holdings which were previously out-of-favour have caught the attention of investors. These are companies positioned to benefit from the economic recovery underway and the reopening of industries hit hardest by the COVID-driven lockdowns. Examples include Elis, Walt Disney, and Zimmer Biomet.
  • The strong performance can also partly be attributed to changes our manager made (Velanne Asset Management) at the height of the market turmoil. Purchases in the aerospace industry (Howmet, Safran) have been among the best performers. Investments in media (Discovery, Fox), financial services (Berkshire Hathaway, Artisan, BrightSphere) and energy (Schlumberger, Frank’s) have also seen large price increases. Velanne added meaningfully to these in the spring of 2020.
  • Some of these stocks have been sold following their recovery. For example, Discovery was eliminated in the first quarter as the stock jumped on the successful rollout of its streaming platform. Energy holdings Shell and Cenovus were also sold after rebounding on the back of a recovery in the price of oil.
  • Three new stocks were purchased in the quarter. Euronext owns and operates stock exchanges across Europe. Meggitt manufacturers and services parts for the aerospace industry, specializing in landing gears. And Raytheon manufacturers a variety of aerospace products for commercial and government use.
  • Two holdings were in the spotlight in Q1. Italian credit research company Cerved gained 35% on news that it received an offer for its debt collection arm, while Texas utility Vistra was impacted by winter storm Uri. The stock fell after the company confirmed that it was forced to purchase electricity in the open market at prices well above the norm. While disappointing, this was a temporary setback. Vistra’s executive team has an otherwise solid record. Additional shares of the stock were purchased.
  • The fund currently has a cash position of 2%.

Positioning

  • The fund is focused on quality companies that generate large amounts of cash flow but are facing temporary headwinds and are trading below their true value. Key areas of investment include industrial goods & services, financial services and healthcare.

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.