Small-Cap Equity Fund

March 31, 2022

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) gained 8.4% in the quarter. U.S. small-caps (Russell 2000 Index) fell 8.9% in Canadian dollar terms.
  • Oil & gas and mining stocks drove much of the index’s gain.

Portfolio Specifics

  • The fund consists of 27 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 positive quarter (+2.7%) despite owning only 18% in energy and materials-related companies. Commodity stocks have been exceptionally strong this year as the price of oil, gas, and base metals has surged. For context, the two resource sectors make up 50% of the Canadian small-cap market. These stocks are inherently volatile as their fortunes are tied closely to commodity prices, which in turn are highly unpredictable. As such, our exposure to resources is more measured.
  • Our commodity investments include MEG Energy, Torex Gold Resources, Ag Growth International, Athabasca Oil (new), and Hudbay Minerals (new). Oil producer MEG had a standout quarter, rising nearly 50%, and grain handling and storage manufacturer Ag Growth gained 35% on the back of strong expected demand as agricultural commodity prices soar. Gold miner Torex was up 20%. All three stocks were trimmed based on their strong performance.
  • The gains in the resource sector extended to companies that service commodity businesses. For example, engineering firm Fluor (+15%) counts energy companies as important clients. Finning, the world’s largest Caterpillar dealer, sells equipment to oil & gas companies, among others, and saw its stock price rise nearly 20%.
  • Park Lawn, Sleep Country Canada, and Premium Brands Holdings were the primary detractors to performance. The funeral home operator, mattress seller, and food distributor have little in common other than they saw major gains last year. NFI Group (manufacturer of buses and coaches) and Boyd Group Services (collision repair) were also down.
  • Two new stocks were added to the portfolio. Athabasca Oil was purchased early in the year. It operates in the oil sands and has seen its stock price increase close to 80% in 2022. We have only a modest position in the company, as its price surged shortly after we started buying the stock. Hudbay Minerals mines copper, an important component in EV batteries and electric motors.


  • 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.