Global Equity Fund

June 30, 2024

Market Context

• Global stocks, as measured by the Morningstar Developed Markets Index, were up 3.2% in Canadian dollar terms in the second quarter.
  
• Technology stocks drove performance in the quarter, namely a handful of U.S. mega-caps. In fact, almost 60% of the S&P 500’s 15% gain this year was driven by 5 stocks.
  

Portfolio Specifics

• The fund owns 47 stocks, of which 21 are domiciled in the U.S., 12 in Europe, 7 in Japan, 3 in Asia-Pacific, 2 in the U.K., and 2 in Canada. Companies range in size from mega-cap Microsoft to small-cap FirstCash Holdings.
  
• The portfolio was flat in the quarter (-0.1%) but has fared well in 2024, rising 8.3%. That said, it has lagged the broader market. Our manager, Aristotle Capital, is increasingly focused on maintaining a prudent level of diversification across countries and industries in a global market that is becoming overly-influenced by large U.S. tech companies. Specifically, we have greater exposure to European and Japanese industrial and consumer companies, and more measured exposure to AI-related stocks, many of which are richly valued. While this has held back performance, we believe our positioning provides greater balance and downside protection.
  
• In the quarter, Qualcomm and Amgen were both rewarded on positive news and were two of our stronger performers. Qualcomm, which makes microchips for smartphones and wireless devices, announced that its Snapdragon chip will be used by Microsoft in its Surface tablets and laptops. The deal represents an important win for Qualcomm as AI applications start to move onto wireless devices. Biotech pioneer Amgen also saw a nice boost after reporting stronger than expected earnings and encouraging results from a weight loss drug in clinical trials.
  
• Two other holdings making headlines were Rentokil and Nemetschek. Rentokil, the world’s leading pest control company, gained 15% after it surfaced that activist investor Nelson Peltz has taken a significant stake in the company. Aristotle welcomes any discussion around constructive change. Nemetschek, which makes software for architects and engineers, announced its largest ever acquisition, purchasing GoCanvas, a leading provider of software for enhancing productivity and safety in construction.
  
• Two stocks were sold: KDDI and Veralto. Japanese telecom KDDI made a questionable capital allocation decision in Aristotle’s view by acquiring convenience store operator Lawson, and we moved on from the stock. Veralto, a small position that was a spinoff from Danaher, was sold after rising 30% following the divestiture.
  

Positioning

• Investments are spread across industries, both fast-growing and steady-eddy, in companies that have a strong market position. Aristotle looks for quality businesses with competitive advantages, pricing power, and proven executives.
  

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.