Small-Cap Equity Fund

December 31, 2021

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) gained 20.3% in 2021. U.S. small-caps (Russell 2000 Index) rose 14.3% in Canadian dollar terms.
  • Resource stocks were a notable area of strength, although the gold sector lagged.

Portfolio Specifics

  • The fund consists of 25 companies, ranging from very small (Waterloo Brewing) to medium-sized businesses (Northland Power). While the majority of holdings are Canadian, there are three U.S. stocks which make up 12% of the portfolio.
  • The fund had a good year, rising 14.5%. Its top contributors to performance included engineering firms Fluor and SNC-Lavalin, toy maker Spin Master, and mattress and bedding retailer Sleep Country Canada (all were up more than 40%). These companies benefited from strong infrastructure and consumer spending.
  • The portfolio trailed the index in 2021, however, due in part to its lower exposure to energy companies, which saw a significant rebound on the back of rising commodity prices (the price of oil rose more than 50%). These businesses tend to produce inconsistent profits, and as such, comprise only a modest weighting in the fund (9%). Our investments include oil producer MEG Energy (purchased in the spring), and fuel supplier & convenience store operator Parkland.
  • Torex Gold Resources was the greatest detractor to performance, falling 30%. The company is performing well operationally, but gold was out of favour in 2021. Cargojet also lost ground. The air cargo provider remains an excellent company. It expanded its fleet, with an eye on long-term growth, which resulted in lower free cash flow. This disappointed some investors. We bought additional shares in both stocks.
  • Following a strong 2020, many green energy companies underperformed their fossil fuel counterparts this year including Northland Power (wind and solar), one of our larger holdings. Our manager, Galibier Capital, believes the business and sector has a strong outlook. Other investments with exposure to clean energy include NFI Group (electric buses) and Hammond Power Solutions (transformers for EV chargers).
  • Galibier feels the fund is well positioned and there was not a lot of turnover as a result. Two new holdings were added in the year (MEG Energy and Hammond Power), while two were sold (Interfor and Intertape Polymer Group). We also participated in Pet Valu Holdings’ IPO in the spring and sold the stock in the fourth quarter after it rose more than 50%.
  • The fund currently has a cash position of 4%.


  • The portfolio has a unique composition, with key areas of investment being capital goods, food & beverage, and engineering services. This is in contrast to the small-cap market’s heavy focus on resource 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.