Small-Cap Equity Fund

September 30, 2021

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) fell 2.5% in the quarter. U.S. small-caps (Russell 2000 Index) declined 1.7% in Canadian dollar terms.
  • Energy and industrial stocks were areas of strength, while the mining sector lagged.

Portfolio Specifics

  • The fund consists of 26 companies, ranging from very small (Waterloo Brewing) to medium-sized businesses (Cargojet). While the majority of holdings are Canadian, there are three U.S. stocks which make up 12% of the portfolio.
  • The fund lost 2.4% in the quarter but is up 11.4% in 2021. Three holdings in particular weighed on performance, Ag Growth International, NFI Group, and Oshkosh. Ag Growth, which is involved in crop handling and storage, faced a few setbacks including severe weather. NFI (a manufacturer of buses) ran into supply chain issues which delayed production. And Oshkosh pulled back after a strong run.
  • Sleep Country Canada was the top performer. The retailer of mattresses and bedding products continues to execute well. The company’s brick and mortar stores are seeing steady demand and its ecommerce business is growing at a good clip (Sleep Country owns Endy, Canada’s leading online mattress-in-a-box company).
  • Park Lawn, Cargojet, and ME G Energy also saw double-digit gains. Park Lawn, which specializes in memorialization and funeral services, is currently the fund’s largest holding. It’s a well run business with good growth prospects stemming from management’s two-fold strategy of pursuing strategic acquisitions (there is a robust pipeline as many “mom-and-pop” operations are experiencing exhaustion due to COVID), and better utilizing its existing assets.
  • There was one stock sale in Q3: Interfor. The company, one of the world’s largest lumber providers, was first added to the fund two years ago when lumber prices were depressed. The commodity subsequently saw a significant rebound (fueled in part by home improvement projects during the pandemic), with prices increasing four-fold and the stock rising in tandem. Our timing of the sale was fortuitous, as we exited the position prior to the most recent pullback in lumber prices.
  • On the buy side, Hammond Power Solutions was purchased. Hammond makes dry-type transformers for industries such as oil & gas, water treatment, construction, and electric vehicle charging (it counts Tesla as a customer). Additional shares of Ag Growth, Fluor, Torex Gold Resources, and Henry Schein were also purchased.
  • 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, consumer, 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.