by Salman Ahmed

These are difficult times for investors. Stocks prices are falling, political rhetoric remains unabated, and people are pessimistic about the future. Our managers have been working hard through this period assessing their holdings and buying and selling when necessary. As a preview to our year-end quarterly commentary, we’ve provided some highlights from our most recent manager meetings.


Connor, Clark & Lunn, the manager of our Income Fund, has been conservatively positioned. The fund holds more in government-backed bonds than bonds issued by companies. Corporate bonds can have higher yields, but CC&L doesn’t feel the current prices appropriately compensate investors for the additional risks.


Stocks have become more reasonably priced than they were in mid-2018 and pockets of new opportunity are emerging. The managers of our Equity Fund (Fiera Capital) and Global Equity Fund (Velanne Asset Management) have found some new ideas in the energy sector, which has been impacted by lower oil prices.

Our Equity Fund has also found some opportunities in Europe, while media & communications stocks continue to be a theme in our Global Equity Fund.

The Canadian small-cap market in general has fared poorly. Companies held in the Steadyhand Small-Cap Fund are no exception. Our Small-Cap manager, Galibier Capital Management, hasn’t made any additions to the portfolio, but like the managers of our other two equity funds, has been adding to stocks that have fallen in price.

Within our equity funds, some stocks have fared worse than the managers would have expected in a sell-off and a few positions have been eliminated based on deteriorating fundamentals. We’ve been doing much more buying then selling, however, as stock valuations are once again becoming attractive.

Founders Fund

We’re following our playbook for falling markets, inching equities higher as stock prices fall. The Founders Fund is now at 58% in stocks (as of last week), up from 54% in the summer. Taking our cue from the managers, we don’t yet think it’s time to go above our long-term target (60%), but are prepared to do so if the current trend continues.

The situation in bonds is markedly different. Bond prices have gone up during the recent equity market decline. But that also means bond yields, which are a decent proxy for future long-term bond returns, have fallen. For example, 10-year government of Canada bonds yield 2.0% today (down from 2.6% in October). Our weight in bonds reflects this view, as we currently have 30% in the asset class – 5% less than our long-term target.

Our cash position in the Fund is 12%, which is lower than it’s been in a while as we’ve been increasing our equity weighting (as mentioned), but still provides us with lots of room to take advantage of further opportunities should they emerge.

The market declines, though anxiety stirring, also provide opportunities to buy top-tier companies that can outlast the near-term fears and come out stronger. That’s not to say that we will get every purchase or sale right or that our timing will be perfect. But Tom and I have no doubt that the prospects for future long-term stock returns today are far better than they were just a few weeks ago.