Global Small-Cap Equity Fund

September 30, 2022

Market Context

  • The global small-cap market (S&P Global SmallCap Index) declined 3.2% in the third quarter in Canadian dollar terms.
  • Communications and real estate stocks were notable sectors of weakness.

Portfolio Specifics

  • The portfolio is currently invested in 46 companies. Sixteen are based in the U.S., 13 in Europe, 8 in the U.K., 3 in Japan, 3 in Australia, 2 in Brazil, and 1 in India.
  • The fund declined slightly in the quarter (-0.4%), but held up better than the market. It’s been a challenging year for the portfolio. Two of our largest areas of investment, industrials and financial services, have faced persistent headwinds. Specifically, our investments in Kion Group (warehouse automation and handling equipment), Huhtamaki (food packaging and containers), and Valmet (automation systems for the pulp and paper industry) have disappointed on the earnings front. As well, St. James’s Place (wealth management) and RenaissanceRe (reinsurance) have struggled. The former’s performance is tied to financial markets while RenaissanceRe was hit by fears of increasing claims from hurricanes in the quarter.
  • There were some notable positive developments to report. Clean Harbors (environmental services) reported strong revenue growth and raised its earnings guidance, which led to a 25% uptick in the stock. Regal Rexnord (maker of electric motors) saw a similar gain on improvements in its profit margins. And National Vision Holdings (optical retailer) gained 20% as traffic to its stores improved.
  • It was an active quarter for stock purchases, with five new businesses added to the portfolio. Saab is a Swedish aerospace and defence company with a growing radar and surveillance business. As European nations increase their security capabilities, the company is in a favourable position. Patria Investments is a leader in alternative asset management in Latin America. Visteon is an automotive electronics supplier and a leader in dashboard screens. Internet Initiative Japan is a leading internet service provider. And Zenkoku Hosho is a Japanese mortgage company (which we’ve owned in the past). The broad weakness in the market allowed our manager, TimesSquare Capital, to buy these companies at discounted prices.
  • Three positions were exited in the period. Kadokawa was sold after it was revealed that the company’s executives were involved in a bribery scandal. We moved on from Nippon Shinyaku as the firm has struggled to get to the final stage of drug releases, while Grafton Group was sold based on a deteriorating consumer spending outlook in the U.K.


  • 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.