Mawer U.S. Equity Fund

Analysis: Mawer is one of those companies that seems to do most things right. They offer a decent family of funds run by quality managers, following a disciplined repeatable process, all at a reasonable cost.

Each of their funds is managed using a research driven, bottom up approach that looks for well managed companies that have a history of earning attractive return on capital, strong balance sheets, and a record of delivering strong operational and financial results. Valuation is a consideration, and he will try to buy names when they are trading below their estimate of its true worth. They stress test their models and assumptions through an intensive scenario analysis that gives them a stronger understanding of the company’s fundamentals and valuation. The process is very patient, with portfolio turnover averaging well below 10% for the past five years.

The result is a well-diversified portfolio that holds just under 60 names with the top ten making up a third of the fund. Sector positions are capped at 20% of the fund based on book value, but recent market growth has brought the weighting of the financial to 23% of the fund. Industrials are the next largest sector, coming in at 16%.

Given Mawer’s track record with most of their other mandates, I really want to like this one as much as I like the others. Unfortunately, it continues to struggle to differentiate itself from its peers. For the three years ending September 30, it has gained an annualized 23.8%, trailing the 25.7% earned by the S&P 500. It did however finish in the upper half of the category.

I remain lukewarm at best on this fund. I don’t believe you will get hurt too badly, but I feel that there are better U.S. equity funds available.