December 31, 2022

Market Context

• Global stocks, as measured by the Morningstar Developed Markets Index, were down 12.4% in Canadian dollar terms in 2022.
  
• The U.S. market was among the worst performing owing to its concentration of technology stocks, which struggled significantly. Currency had a major impact in 2022. The loonie declined 7% against the U.S. dollar, which boosted the returns of American stocks in $Cdn terms. It gained against the Yen (+7%) and British Pound (+5%), dampening the returns of these stocks, and ended flat against the Euro.
  

Portfolio Specifics

• The fund owns 49 stocks, of which 20 are domiciled in the U.S., 12 in Europe, 8 in Japan, 4 in Canada, 3 in Asia Pacific, and 2 in the U.K. Companies range in size from mega-cap Microsoft to small-cap FirstCash Holdings.
  
• The fund performed in line with global markets in 2022, declining 13.2%. Our technology holdings had a challenging year, specifically Adobe, PayPal, Qualcomm, and Nemetschek. Industrial and consumer cyclical holdings also struggled, including Nidec (electric motors), Rational (commercial ovens), and Lennar (homebuilder).
  
• There were some bright spots of note. Japanese holding Pan Pacific International Holdings gained over 40% on the back of increased demand at its discount retail stores. TotalEnergies (oil & gas), Amgen (healthcare), and Munich Re (insurance) also turned in double-digit returns.
  
• Our manager, Aristotle Capital, took advantage of the market volatility in 2022, purchasing eight new holdings. Most of these occurred in the first half of the year when volatility was at its most extreme (Brookfield Asset Management, Michelin, FMC, Dolby Laboratories, Munich Re). Recent purchases include Royal DSM and Norwegian Cruise Line Holdings. DSM is a Dutch producer of food additives for nutrition and flavour, while Norwegian Cruise Line has a 10% market share in the cruise line industry and caters mainly to premium clients.
  
• Eight stocks were sold for valuation reasons or poor business execution.
  
• The fourth quarter was a busy time for some of our holdings. Brookfield, Danaher, Medtronic and Lennar all announced spin-offs. Sony purchased Zee, one of India’s largest broadcasters. Uranium producer Cameco announced a partnership to purchase Westinghouse’s nuclear plant servicing business. And regulators sued to block Microsoft from buying video game producer Activision Blizzard, and home security leader Assa Abloy from acquiring Spectrum Brands’ hardware division.
  

Positioning

• Our manager looks for quality businesses with competitive advantages, pricing power, and proven executives. Investments are spread across industries, both fast-growing and steady-eddy, in companies that have a strong market position.
  

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.