Mawer Investment Management Ltd. is on the nice run. Its New Canada Fund has been in the black for 14 of the last Fifteen years, with 2008 its only drop in to the red, and much more recently, it’s soared. But simply how has has got the Calgary-based fund managed to beat the pants off its peers with such consistency in the last couple of years?
Real estate equity funds on the top when examining 15-year returns
The past decade . 5 appear to have been quite unkind to many Canadian equity fund investors, as well as worse to people invested elsewhere. Actually, performance figures for that 15-year period through December 2015 show fixed-income funds fared almost as well and in some cases better than their stock-driven kin.
The Mawer New Canada Fund’s performance topped all funds in the country within the 15-year period through December 2015, with an average annual compound yield of 16.3 per cent. It did the same for that 15-year period through December 2014, by having an average 16.7 percent yield. And it was second overall at 16.5 per cent the prior year. (By way of comparison, the BMO Canadian Small Cap Index averaged four per cent for the 15 years through December 2015, and also 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 within an article written by me for the Financial Post in May 2002, almost 14 years back! That’s pretty solid long-term consistency, and the answer is very similar now as it was 14 years back.
“We haven’t changed anything,” says fund manager Jeff Mo. Inquired about the reasons for that outperformance, he replies with misplaced modesty: “Focus, and clearly a little bit of luck.”
“We are bottom-up investors and as with many bottom-up investors, we glance for a combination of good businesses with higher management, trading at good prices,” Mo says. “Of course, we’re not the only ones who sign up for those measures, but what separates us from a number of other funds is the fact that we concentrate on a specific type of business model. We glance for wealth-creating companies, and by that I mean firms that earn returns on their capital which are higher than the price of capital.
“We feel, just like many economists, that companies having a sustainable competitive advantage would be the ones that may generate wealth over a long period of time,” Mo says. “So we buy them, and then we hold them for a long time. We apply that very same philosophy across all asset classes.”