Small-Cap Equity Fund

December 31, 2020

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) gained 12.9% in 2020. U.S. small-caps (Russell 2000 Index) rose 17.6% in Canadian dollar terms.
  • Gold stocks were an area of strength, while oil & gas securities lagged considerably.

Portfolio Specifics

  • The fund consists of 25 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 11% of the portfolio.
  • The fund had a positive year, rising 4.9%. Many holdings saw large declines early on as the spread of COVID-19 led to a shutdown of economies around the world. In the second half of the year, however, the fund saw a sharp rebound, with companies that have exposure to e-commerce and the work from home phenomenon benefiting in particular (e.g. Cargojet, Intertape Polymer, Spin Master). The portfolio lagged the index in 2020, however, due in part to its lower exposure to gold companies.
  • When a vaccine with a high efficacy rate was developed and approved late in the year, economically-sensitive businesses saw a significant uptick. Stocks including Interfor (lumber producer), Finning (Caterpillar dealer), Points International (loyalty solutions for airlines and hotels), and Fluor (engineering and construction services) had a stellar fourth quarter as investors gravitated towards companies poised to see a boost from a return to a more normal economic environment.
  • Ag Growth International (grain and fertilizer storage and handling) was the biggest detractor to performance, falling over 30%. The company’s profitability declined in a challenging year but the manager, Galibier Capital, still likes the fundamentals and longer-term prospects for the business.
  • Galibier has focused on maintaining a balance between growth and defensive companies over the last few years but has been looking closer at the latter of late, as illustrated by the new additions in 2020: Badger Daylighting (hydrovac services), Boyd Group Services (collision and auto glass repairs), Torex Gold Resources (gold producer), and most recently, Savaria (makes accessibility products such as wheelchair lifts and home elevators).
  • The fund’s two small oil & gas-related holdings, Cardinal Energy and Pason Systems, were eliminated in the fourth quarter. The manager is wary of the outlook for the energy sector and has no direct exposure to oil producers now.
  • No new companies were added to the fund but additional shares were purchased in Oshkosh, SNC-Lavalin, and Torex Gold Resources, which trailed the market.
  • The fund currently has a cash position of 3%.


  • The portfolio has a unique composition, with key areas of investment being capital goods, transportation, 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.