| Fund Company | Mawer Investment Management |
| Fund Type | Global Small / Mid Cap Equity |
| Rating | A |
| Style | Blend |
| Risk Level | Medium |
| Load Status | No Load |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Paul Moroz since October 2007 |
| MER | 1.78% |
| Code | MAW 150 – No Load Units |
| Minimum Investment | $5,000 |
Analysis: Despite being one of the new kids on the block at Mawer, this global small cap fund has more than held its own, both when compared to the MSCI World Small Cap Index and its peer group. For the five years ending January 31, it has earned an annualized return of nearly 30%, handily outpacing both the index and the peer group.
As impressive as the returns have been, the results from their emphasis on risk management have been even more so. The fund has a level of volatility that is lower than the peer group, while holding up very well when markets are in decline.
This is because of the managers research focused, bottom up investment process that looks for companies with strong business models that earn a high return on capital, largely because of a sustainable competitive advantage. They also spend a great deal of time focusing on the company’s management. Once they have identified a potential investment candidate, they build out and stress test financial models under a number of different scenarios. They are also careful to make sure that they are buying a company at a level that is well below their estimate of its true worth.
This approach is the same process that is used on other Mawer managed fund, so while it may not have as long a track record, I am more than comforted by the fact that the same approach is used on this fund.
Like other Mawer funds, it is dramatically different than its benchmark. At the end of January, it was very overweight in industrials, but were neutral or underweight in most other sectors. The portfolio is well diversified, holding nearly 80 names with the top ten making up over a third of the fund. Because of this positioning, it is highly likely that the fund may experience period of time where its performance is disconnected from both the index and the peer group.
I don’t expect that it can continue to deliver the same level of absolute returns for investors. It was launched at a great time for small cap stocks, and valuations have largely caught up to their large cap brethren. Still, I expect that this fund can continue to deliver returns that outpace both the index and the peer group, and do so with much less volatility over time, making this a great option for those investors looking for some global small cap exposure within their portfolio.