Trimark U.S. Small Companies Class Fund

Analysis: Despite the April 2011 defection of long standing co-lead portfolio manager Ted Chisholm to Edgepoint Wealth Management, this fund has held up relatively well. Stepping into Mr. Chisholm’s shoes is Virginia Au, who has worked on the fund since 2006. Adding bench strength to the team was the appointment of Jason Whitting who has managed a number of other small cap focused products for Trimark including the Trimark North American Endeavour Fund.

It’s important to note that since the departure of Mr. Chisholm, there has been no change to the investment management process or investment philosophy in the management of the fund. The Fund is still managed under the basic Trimark philosophy of “business people buying businesses”. The process used is very much a value focused, bottom up approach where the managers are looking for high quality, well managed stocks that are largely ignored by the rest of the investment world. They look for good management teams that are typically the number one or number two ranked companies in their industry.

Given the investment philosophy, the portfolio tends to be fairly concentrated, holding anywhere from 20 to 30 companies. The managers are also very patient and tend to take a 5 year or longer view for the stocks in the fund. As a result, portfolio turnover tends to be consistently very low.

Performance has been strong, both on an absolute and a regular basis. As of September 30, the fund is up 14.4% while the Russell 2000 Index in Canadian dollar terms was actually down by nearly 2.8%. So far in 2011, the fund is up 0.9% while the index is down by 13.2%.

Given the process and approach that the manager takes, there will be periods of time where this fund will underperform over the short term. But given the well defined process and approach in place, we feel that this fund can be a good compliment in a well diversified portfolio for the long term.