Small-Cap Equity Fund

September 30, 2024

Market Context

• The Canadian small-cap market (Morningstar Canada Small Cap Index) rose 9.8% in the quarter. U.S. small-caps were up 7.0% in Canadian dollar terms.
  
• Communication services and basic materials stocks were the strongest performers. Energy stocks, on the other hand, traded lower as the price of oil fell 18%.

Portfolio Specifics

• The fund consists of 21 companies, ranging from very small (Diversified Royalty) to medium-sized businesses (Generac Holdings). While the majority of holdings are Canadian, there are five U.S. companies which make up 19% of the portfolio’s stocks.
  
• The portfolio gained 5.3% in the quarter and is up 14.1% year-to-date. Our resource investments were among the top performers in Q3, and have been key drivers of performance this year. Gold producer Torex Gold Resources was up over 20% in the quarter and has risen 75% in 2024. The company is benefiting from strong gold prices and positive sentiment towards the metal, which is widely viewed as a hedge against geopolitical instability. Copper miner Capstone Copper gained 9% and is up over 60% this year. Our manager, Galibier Capital, likes the fundamentals for copper, given its key role in the electrification of the global economy, and feels Capstone has an attractive portfolio of long-life mines.
  
• VF Corporation, an American apparel and footwear company, also had a great quarter, with the stock up 45%. VF has been volatile, but Galibier likes the new management team and recent hire of Sun Choe (Lululemon’s former Chief Product Officer) to lead a turnaround of the company’s key Vans brand.
  
• Other strong performers included lumber producer Interfor and mobility products specialist Savaria. Interfor rose 23%, a nice rebound after a weak stretch earlier in the year. With the housing shortages in the U.S. and Canada, the company is well positioned as a leading producer of high-quality lumber for joist, flooring and roofing products. Savaria gained 20%, and is up over 40% this year, on the back of strong financial results as management has adeptly integrated recent acquisitions.
  
• Boyd Group Services has been a key detractor to performance this year, with the stock down almost 30% (-20% in Q3). The company, which operates collision repair centers in North America, has been hurt by good weather. A lack of snow on the roads led to a lower volume of accidents and repairs this year. Boyd continues to grow through smart acquisitions, however, and trades at an attractive valuation.
  
• There were no new purchases or stock sales in the quarter.
  

Positioning

• The portfolio has a unique composition, with key areas of investment being capital goods, industrial services, food & beverage, and consumer discretionary companies. This is in contrast to the small-cap market’s heavy focus on resource companies.
  

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.