Managed by Edgepoint’s team of
Tye Bousada, and
Frank Mullen, the EdgePoint Canadian Portfolio invests in companies of any size,
primarily in Canada, that have strong competitive positions, excellent
long-term growth prospects, and strong management teams. Valuation is a key
component of the Edgepoint process, as the fund’s managers look to buy
companies at prices that are below what they believe them to be worth.
While the focus is on Canadian names, the fund can invest abroad, but
usually won’t put more than 15% in foreign names.
The portfolio is built on a bottom-up basis, with sector weights being the
byproduct of the stock selection process. The result is a portfolio that
looks nothing like the index. To help ensure proper diversification, the
managers look to diversify across business ideas.
It is a concentrated, yet diversified, portfolio, typically holding around
65 names, with the top 10 holdings representing just under 45% of the fund.
The fund’s time horizon is longer term, typically five or more years, and
the managers exercise patience, allowing their investment thesis to play
Top holdings as of Sept. 30 (the most recent data available at the time of
PrairieSky Royalty Ltd. (TSX: PSK),
CES Energy Solutions Corp. (TSX: CEU),
Granite Real Estate Investment Trust (TSX: GRT.UN),
Constellation Software Inc. (TSX: CSU), and
Restaurant Brands International Inc. (TSX: QSR).
Portfolio turnover has been very modest, averaging less than 30% for the
past five years. The managers will sell a company for a couple reasons:
First is that the investment thesis is no longer valid; and second, they
are able to find a better idea for the portfolio. The management team is
constantly looking to upgrade and will sell a name to make room when a
better idea becomes available.
Performance of this fund has been excellent, on both an absolute and
risk-adjusted basis. For the past five years, it’s delivered an average
annual compounded return of 13.2%, outpacing the index and peer group.
Volatility has been above average, which is not surprising given the
all-cap nature of the portfolio.
Costs are quite competitive, with an MER of 2.15% for the front-end units,
which is well below the category average.
This is a great core Canadian equity offering for those who can stomach the
potential for higher volatility.
EdgePoint Canadian Portfolio
EdgePoint Wealth Management
FundGrade A+ Awards:
Prospectus risk level:
Geoff MacDonald, Ted Chisholm, Andrew Pastor, Tye Bousada, and Frank Mullen
EDG108 (Front-end load)
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
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only and is not intended as personalized investment advice.