Equity Fund

September 30, 2024

Market Context

• The Canadian stock market (Morningstar Canada Index) rose 10.1% in the third quarter. Most industry sectors posted positive returns, with real estate, financial services, and utilities among the best performers.
  
• Global stocks, as measured by the Morningstar Developed Markets Index, gained 5.2% in Canadian dollars.
  

Portfolio Specifics

• The portfolio consists of 26 stocks, of which 14 are headquartered in Canada, 10 in the U.S., and 2 overseas.
• The fund had a strong quarter, rising 7.0%, and is up 16.6% this year. Top performers in the period included fast food leader McDonald’s (+20%), and financial services companies S&P Global (+16%), TD Bank (+14%), and TMX Group (+12%).
  
• McDonald’s gain this quarter offset its losses from earlier in the year. The low-income consumer has struggled in this economic environment. In the U.S., this consumer is often attracted to McDonald’s, but recently has found its meals too expensive. The company responded with a $5 value meal which has brought customers back into the store and strengthened its value proposition.
  
• As one of the main credit rating agencies for bonds, S&P Global has benefited from an increase in bond issuance. However, rating demand can be cyclical. Our manager, Fiera Capital, likes the business because it has diversified its revenue base with increasing sales coming from index and market data. Likewise, stock exchange operator TMX Group has broadened its revenue streams to become a more diversified business. Both stocks are large holdings in the portfolio.
  
• Nestle, a leading Swiss-based consumer products company, has had a challenging year, falling 13%. The company’s revenue growth has slowed and it recently announced a leadership change to help right the ship. The new CEO is a longtime Nestle executive (his predecessor was brought in from another industry) who believes the company needs to focus more on its core offering. Fiera is watching Nestle closely to see how the new boss responds to the challenge.
  
• Our two rail holdings, CN Rail and Canadian Pacific Kansas City, were hurt by the work stoppage in the summer and have detracted from performance this year. With the labour problems behind them, both franchises are in tact and ready for volume.
  
• There were no new purchases or stock sales in the quarter.
  

Positioning

• The fund is comprised of a concentrated group of best-in-class businesses operating in a range of industries with solid long-term demand profiles. Focus is on market leaders that generate steady profits and have proven leaders at the helm.
  

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.