Global Small-Cap Equity Fund

December 31, 2020

Market Context

  • The global small-cap market (S&P Global SmallCap Index) rose 13.7% in 2020 in Canadian dollar terms.
  • In general, small-cap stocks didn’t fare as well as large caps. Technology and precious metal companies led the way, while industrials and financials struggled.

Portfolio Specifics

  • The fund is managed by New York-based TimesSquare Capital Management, which specializes in small-cap investing. The portfolio is currently invested in 38 companies. Fifteen are based in the U.S., 11 in Europe, 5 in Japan, 3 in the U.K., 3 in Australia, and 1 in Asia.
  • The fund had a positive year, gaining 7.6%. Japanese restaurant chain Sushiro Global (+80%), Mobile game producer Zynga (+60%), medical testing company Charles River Laboratories (+55%), and Swedish streaming platform Nordic Entertainment (+50%) were among the best performers.
  • That said, the fund didn’t keep up with the market. Its aerospace holdings struggled as global travel ground to a halt. These companies were swapped out for new and existing holdings that had also done poorly in February-March, but showed long-term promise. Many of the holdings, like those mentioned earlier, have produced strong returns but didn’t keep up with tech and precious metal stocks.
  • Financial holdings make up a large part of the portfolio (21%) and were among the laggards. Stocks like RenaissanceRe have been shunned by investors despite their potential. The company is a leading reinsurer for catastrophe insurance and investors are worried about its exposure to environmental risk (a record number of hurricanes hit the U.S. in 2020). Our manager, TimesSquare Capital, has a different perspective. It knows that RenaissanceRe can reprice its policies to more than account for the increased risk. Additionally, demand for catastrophe and business interruption insurance is rising because of climate change and COVID-19. Finally, the company is trading at the lowest valuation in its history despite having a strong track record.
  • Technology stocks continue to be an important part of the fund. Zynga and Nordic Entertainment have benefited from the exalted status of tech & internet-related stocks. But the manager has steered clear of overhyped companies in what we’ve dubbed the ‘non-profit sector’. Rather, TimesSquare focuses on profitable businesses. Holdings include Gartner (consulting), Huya (Chinese video game streaming) and Tyler Technologies (information management).
  • The fund currently has a cash position of 10%.


  • The fund invests in businesses with a clear competitive edge, a record of consistent earnings growth, and management that has clear goals and a record of success.

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.