Like its global counterpart, this fund invests in a concentrated portfolio of companies of any size. The big difference, apart from a different management team is while the global fund has a true go anywhere mandate, this offering must invest no less than 51% in Canada.
Like other Trimark branded funds, the managers look for well managed companies, generating strong levels of free cash flow, and sustainable barriers to entry that are trading at levels below what they believe it is worth. While the focus is in Canada, they have the flexibility to look abroad for opportunities.
Companies in the fund tend to skew more towards the mid and small cap end of the spectrum, although there are a few larger names including Power Corp., CI, and Cisco Systems.
Given the bottom up process, and emphasis on cash flow, the sector mix is often different than the index. At the end of February, it was overweight healthcare, industrials, technology and energy, and had no exposure to telecom, consumer staples or utilities. It was also underweight materials. They are also not afraid to hold cash when no opportunities are available, and at the end of February held slightly more than 10% in cash.
Longer term performance has been strong, outpacing many of its peers and finishing well in the top quartile from 2009 to 2013. It struggled in 2015, underperforming largely on their energy holdings. They were a bit early into the space, and that has hurt short term, but is expected to payoff once we see some stability return to the energy market. It has done a decent job in protecting capital in down markets.
I like the fund, but would be reluctant to use it as a core holding, given the significant small and mid-cap exposure. It may fit in a portfolio as a piece of your overall equity sleeve as a potential return enhancer and risk diversified, given its lower correlation to the broader equity market.