The funds have profited from hidden gems, bargain investments, and long-term focus
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While the average mutual fund has underperformed, several have consistently beaten their benchmarks over the years. And they’ve done so in unremarkable fashion, relying on low fees, low-profile investments, and long-term focus.
“Investing at its core should be boring,” Vijay Viswanathan, director of research at Mawer Investment Management, told the Globe and Mail. Under that investment style, the Mawer Canadian Equity Fund has achieved an annual average return of 10% over the last 20 years. In contrast, the average Canadian equity fund and the S&P/TSX total return index achieved just 5.8% and 7.2%, respectively, over the same period.
Avoiding short-lived fads, Mawer’s fund managers buy stocks based on good businesses, good managers, and bargain prices. Like most of its peers, the Mawer Canadian Equity fund’s top holdings include big Canadian financial companies and energy firms, but smaller companies have helped them achieve strong returns over time. Unitholders in Mawer’s equity fund — which requires a minimum investment of $5,000 — also enjoy a management expense ratio of 1.2%, much lower than the average 2.5% for Canadian equity funds.
Another unsung hero, the North Growth US Equity fund, has generated annual returns averaging 8.6% over the past 15 years, beating same-period returns of 3.2% and 5.5% from the average US equity fund and the S&P total return index, respectively. “We do zero marketing. We don’t have a sales department,” said Rory North, North Growth Management CEO and lead portfolio manager. The firm passes on the cost savings to investors who reach the $150,000 minimum investment by limiting their annual fee to 1.2%.
Candidate stocks are selected for the North Growth US Equity fund based on their revenue growth potential. They are then bought when they trade at low prices. “[W]e simply stick to our growth-at-a-reasonable-price discipline,” North said.
On the European and emerging-markets side, which has lagged over the past two years, the Leith Wheeler International fund has achieved a 15-year average annual return of 7.6%. In comparison, the average international equity fund rose just 3%, and the MSCI EAFE Total Return index advanced only 5% in the same period.
The Leith Wheeler International fund is sub-advised by Sprucegrove Investment Management, which has a value-based focus and $20 billion in global equities under management. “They invest bottom up, company by company,” said Michael Job, Leith Wheeler Investment Counsel vice president and portfolio manager.
Open to high-net-worth investors with a minimum investment of $500,000, the fund has an annual management fee of just 1.63%. Despite this, investors benefit from the best bargain-hunting capabilities, made possible by SpruceGrove’s deep pockets.
“If they can’t meet with management from their offices in Toronto, their analysts will go to Japan or Brazil or Europe … to get what they feel is a comprehensive understanding of the business,” Job said.
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“Investing at its core should be boring,” Vijay Viswanathan, director of research at Mawer Investment Management, told the Globe and Mail. Under that investment style, the Mawer Canadian Equity Fund has achieved an annual average return of 10% over the last 20 years. In contrast, the average Canadian equity fund and the S&P/TSX total return index achieved just 5.8% and 7.2%, respectively, over the same period.
Avoiding short-lived fads, Mawer’s fund managers buy stocks based on good businesses, good managers, and bargain prices. Like most of its peers, the Mawer Canadian Equity fund’s top holdings include big Canadian financial companies and energy firms, but smaller companies have helped them achieve strong returns over time. Unitholders in Mawer’s equity fund — which requires a minimum investment of $5,000 — also enjoy a management expense ratio of 1.2%, much lower than the average 2.5% for Canadian equity funds.
Another unsung hero, the North Growth US Equity fund, has generated annual returns averaging 8.6% over the past 15 years, beating same-period returns of 3.2% and 5.5% from the average US equity fund and the S&P total return index, respectively. “We do zero marketing. We don’t have a sales department,” said Rory North, North Growth Management CEO and lead portfolio manager. The firm passes on the cost savings to investors who reach the $150,000 minimum investment by limiting their annual fee to 1.2%.
Candidate stocks are selected for the North Growth US Equity fund based on their revenue growth potential. They are then bought when they trade at low prices. “[W]e simply stick to our growth-at-a-reasonable-price discipline,” North said.
On the European and emerging-markets side, which has lagged over the past two years, the Leith Wheeler International fund has achieved a 15-year average annual return of 7.6%. In comparison, the average international equity fund rose just 3%, and the MSCI EAFE Total Return index advanced only 5% in the same period.
The Leith Wheeler International fund is sub-advised by Sprucegrove Investment Management, which has a value-based focus and $20 billion in global equities under management. “They invest bottom up, company by company,” said Michael Job, Leith Wheeler Investment Counsel vice president and portfolio manager.
Open to high-net-worth investors with a minimum investment of $500,000, the fund has an annual management fee of just 1.63%. Despite this, investors benefit from the best bargain-hunting capabilities, made possible by SpruceGrove’s deep pockets.
“If they can’t meet with management from their offices in Toronto, their analysts will go to Japan or Brazil or Europe … to get what they feel is a comprehensive understanding of the business,” Job said.
Related stories:
CI Investments announces automatic preferred pricing scheme
Mackenzie moves to lower costs for clients
