Global Small-Cap Equity Fund

June 30, 2022

Market Context

  • The global small-cap market (S&P Global SmallCap Index) declined 14.0% in the second quarter in Canadian dollar terms.
  • All sectors turned in negative returns in the period. Mining, technology, healthcare, and consumer discretionary stocks were among the worst performers.

Portfolio Specifics

  • The portfolio is currently invested in 44 companies. Fifteen are based in the U.S., 12 in Europe, 9 in the U.K., 3 in Japan, 3 in Australia, 1 in Brazil, and 1 in India.
  • Areas of significant investment faced headwinds, notably companies in the industrial (36% of the portfolio), financial services (23%), and healthcare (10%) sectors.
  • Industrial goods & services companies have faced pressure from the rise in commodity prices and constrained supply chains. While the declines in the industry have been widespread, the degree to which each company is impacted has varied. For example, First Advantage, a leader in employment reference checks, doesn’t face the same pressures from high oil prices as other industrial companies. On the contrary, its services have been in demand and both revenues and profits have increased over the last year. Despite the improving profitability, the stock price fell 35% over the quarter. Kion Group (warehouse automation equipment) and Rotork (industrial flow control equipment) also saw sharp declines despite solid underlying fundamentals.
  • The broad declines have presented new opportunities across sectors. Our manager, TimesSquare Capital, added Viscofan, Downer EDI, Tate & Lyle and WNS to the portfolio. The companies have little in common, which goes to show the breadth of opportunities TimesSquare is finding. Viscofan is a Spanish maker of sausage skins; Downer is among the leading Australian infrastructure construction consultants; Tate & Lyle produces ingredients used in food manufacturing; and Mumbai-headquartered WNS specializes in data analysis.
  • TimesSquare has found an increasing number of ideas in the U.K. over the last 12 months. British companies now make up 20% of the fund (up from 12% a year ago). Holdings include home repair provider HomeServe, investment firm St. James’s Place, online auto marketplace Auto Trader, telecom testing company Spirent Communications, and specialist media company Future.
  • Two holdings were sold in the quarter. Zynga, the maker of popular mobile games like Words with Friends and Farmville, was acquired by Take-Two Interactive and we sold our position. ITT was also sold to make way for more attractive opportunities.


  • The fund invests in businesses with a clear competitive edge, a record of consistent top line (revenue) and bottom line (earnings) growth, and management that has experience, clear goals and integrity.

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.