Small-Cap Equity Fund

December 31, 2022

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) fell 9.3% in 2022. U.S. small-caps (Russell 2000 Index) declined 14.7% in Canadian dollar terms.
  • Energy stocks had a strong year while every other sector of the market declined.

Portfolio Specifics

  • The fund consists of 26 companies, ranging from very small (Hammond Power) to medium-sized businesses (Spin Master). While the majority of holdings are Canadian, there are three U.S. stocks which make up 14% of the portfolio.
  • The fund had a negative year, falling 5.7%, but outpaced the small-cap market. This was notable given the portfolio has only modest exposure to energy stocks (8%). The sector gained roughly 30% and comprises a much larger portion of the index.
  • The year’s top performers represented a diverse array of businesses: MEG Energy (oil producer), Ag Growth International (fertilizer and grain storage and handling), Aritzia (women’s fashion retailer), Hammond Power Solutions (dry-type transformers), and Fluor (engineering and construction). These companies grew their revenues and executed well in a tougher economic environment.
  • The biggest detractors to performance included Park Lawn (funeral, cremation and cemetery provider), NFI Group (bus and motor coach manufacturer), Spin Master (maker of toys and games), and Sleep Country Canada (mattress and sleep accessories retailer). The common theme is that these were some of the fund’s top performers in 2021 and they gave back some of their prior gains. Our manager, Galibier Capital, continues to like the outlook for these businesses and purchased additional shares on price weakness. The one exception is NFI, which has struggled through the pandemic and has been acutely impacted by supply chain issues.
  • The heightened volatility in 2022 led to some compelling opportunities in Galibier’s view, and five stocks were purchased: Aritzia, Athabasca Oil (which was later sold following a strong price gain), Hudbay Minerals (copper and zinc miner), Enghouse Systems (software solutions), and Generac (generators and backup power solutions for households and businesses). These companies are well established industry leaders that sell goods and services that have strong demand.
  • Four investments were sold during the year: Athabasca Oil (strong performance), Points (takeover), Winpak (better opportunities elsewhere), and Fluor (strong performance). Waterloo Brewing received a takeover offer late in the year but Galibier is content to wait and see if any competing offers come in.


  • The portfolio has a unique composition, with key areas of investment being capital goods, food & beverage, and consumer discretionary companies. 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.