Global Equity Fund

March 31, 2019

Market Context

  • Global stocks, as measured by the Morningstar Developed Markets Index, were up 10.1% in Canadian dollar terms in the quarter.
  • Returns were strong across the globe. European markets were up 8-12% in local currency terms, the U.S. was up over 13%, Japan +8% and emerging markets +10%. The loonie rose against most currencies, which dampened returns.

Portfolio Specifics

  • The fund holds 51 stocks, of which 21 are based in Europe (including the U.K.), 19 in the U.S., nine in Asia, and two in Canada.
  • The portfolio rebounded nicely in the quarter following a rough end to 2018. That said, the fund has lagged the global market for quite some time owing to its focus on ‘value’ stocks rather than ‘growth’ stocks. Fast growing companies have been the market darlings over the past several years, but the tide will eventually turn.
  • Mergers and acquisitions were a theme in the fund in the first quarter. Disney’s acquisition of 21st Century Fox closed in March. As a shareholder of 21st Century Fox, we received shares in the newly formed Fox Corporation as well as shares in Disney and a cash sum. We used some of the cash to buy more shares in Fox as well as additional shares in Disney (we already owned the stock) on price weakness. The manager of the fund, Velanne Asset Management, continues to like the prospects for both companies. They generate significant amounts of cash and, importantly, have good balance sheets. What’s more, the sector is ripe for further consolidation.
  • Shire is another holding that was taken over. The Irish biotech was acquired by Takeda Pharmaceutical, the largest drug company in Asia and a leader in plasma therapies and vaccines. We held onto our shares in Takeda following the merger, as Velanne believes the stock is very cheap and its drug pipeline is under-appreciated.
  • We added to two Japanese investments on price weakness, JXTG Holdings and Seven & I Holdings. JXTG is Japan’s biggest oil refiner. Its shares have fallen as the industry has experienced some headwinds and consolidation, but Velanne likes the company’s longer-term prospects in an industry that now has fewer players and better pricing power. Seven & I, which operates over 50,000 7-Eleven stores in Japan and Asia, is facing some challenges with a tight labour market in Japan, but the fundamentals of the business remain attractive.
  • The fund currently has a cash position of 9%.


  • 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 healthcare, financial services, oil & gas services, consumer products, and media & entertainment companies.

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.