Mawer Investment Management Ltd. is on the nice run. Its New Canada Fund has elevated the black for 14 from the last Fifteen years, with 2008 its only drop in towards the red, and even more recently, it’s soared. But simply how has has got the Calgary-based fund managed to beat the pants off its peers with your consistency within the last couple of years?
Real estate equity funds on top when examining 15-year returns
The past decade . 5 happen to be quite unkind to a lot of Canadian equity fund investors, as well as worse to the people invested elsewhere. Actually, performance figures for your 15-year period through December 2015 show fixed-income funds fared too and perhaps much better than their stock-driven kin.
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The Mawer New Canada Fund’s performance topped all funds in the usa over the 15-year period through December 2015, by having an average annual compound yield of 16.3 per cent. It did the identical for your 15-year period through December 2014, having an average 16.7 percent yield. Also it was second overall at 16.5 per cent recent times. (By way of comparison, the BMO Canadian Small Cap Index averaged Four percent for that Fifteen years through December 2015, as well as the S&P/TSX Smallcap Index TR averaged 3.2 percent.)
Given those figures, it’s certainly a timely question – however, this isn’t the first time I’ve asked it: Mawer originally appeared in a article created by me for that Financial Post in May 2002, almost 14 in the past! That’s pretty solid long-term consistency, along with the answer is much the same now because it was 14 in the past.
“We haven’t changed anything,” says fund manager Jeff Mo. Asked about the reason why for that outperformance, he replies with misplaced modesty: “Focus, and clearly some luck.”
“We’re bottom-up investors then when with a lot of bottom-up investors, we glance for just about any combination of good businesses with higher management, trading at good prices,” Mo says. “Obviously, we’re just a few from the ones who subscribe to those measures, but what separates us from a quantity of other funds is the fact that we concentrate on a particular kind of business model. We glance for wealth-creating companies, i mean , companies that earn returns on their own capital which are greater than the price of capital.
“We feel, similar to many economists, that companies using a sustainable competitive advantage will be the ones that may generate wealth round the long time,” Mo says. “And then we get them, and then we hold them for just about any very long time. We apply that exact same philosophy across all asset classes.”
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The holding strategy has led to a really low MER (1.4 %, as compared to the Canadian small/medium cap fund average of two.Four percent), which will help elevate investor returns. “We operate a concentrated portfolio of 53 names and that we don’t trade greatly – our annual turnover is 15 % – and then we won’t need a large sprawling infrastructure,” says Mo.
As for what the long run brings, Mo is guarded.
“Our expectations are tempered for an additional couple of years,” he states. “The Canadian economy will grow more moderately, especially due to the challenge of lower commodity prices.
“Sometimes such as this, companies intensify their rivalries, because there’s no growth to capture so they try and capture business,” Mo adds. “So it’s doubly crucial that you pick companies using a sustainable competitive advantage – they won’t be losing business.”
A simple strategy, no less than within the telling, another that’s obviously proved helpful for Mawer for several years, for the extent that the New Canada Fund has among the finest, otherwise the very best, long-term performance records of the fund in the united states. But don’t bother rushing for the phone to place a buy order because, alas, the fund isn’t accepting new money.
“It’s been closed to new investors since 2004,” Mo says, somewhat apologetically.
