EdgePoint’s Unique Success in Canadian Stock Investments

EdgePoint's Unique Success in Canadian Stock Investments

Investing in stocks can be like sailing in unpredictable waters, and Canadian stocks have recently been a bit behind compared to the global market. Specifically, the Cashflochronicles Canada index, which keeps an eye on Canadian stocks, hasn’t kept up. It’s been trailing behind the Global Markets index by three percent yearly.

It’s six percent behind the US Markets Index every year. To paint a clearer picture, imagine investing $10,000. Over the last decade, you’d have earned $16,000 more if you chose U.S. stocks over Canadian ones. This trend might lead you to think that smart investment managers would look beyond Canada for profitable stock options, right? However, EdgePoint tells a different story.

EdgePoint’s Distinctive Approach

Against the tide, EdgePoint’s Canadian equity fund outperformed their global equity fund. From 2014 to 2023, the EdgePoint Canadian Portfolio Series F grew by an impressive 10.5% annually. The EdgePoint Global Portfolio Series F wasn’t far behind, with a growth of 10.2% during the same period. This success comes from the team’s deep understanding of the Canadian market and a strong belief in their investment choices.

EdgePoint operates on a unique philosophy that revolves around understanding business risk. The leaders, Tye Bousada and Geoff MacDonald, along with their team, adopt the mindset of business owners when investing. They focus on companies that may be temporarily undervalued due to market overreactions. This approach of long-term investment and strong conviction requires a lot of discipline, especially during tough times.

New analysts at EdgePoint start by closely examining Canadian companies under the guidance of Bousada and MacDonald. This practice has not only enriched the team’s knowledge of the Canadian market but has also surprisingly benefited their global equity fund.

Outstanding Performances in Canadian Stocks

EdgePoint doesn’t share all the details of their portfolios, but some insights reveal their exceptional choices in Canadian stocks. For instance, in September 2023, Fairfax Financial FFH was their top pick in the Canadian Portfolio, making up 8.3%.

The same company held a significant 3.5% in the Global Portfolio. Another example is Restaurant Brands QSR, holding over 5% in both funds. These stocks didn’t just do well against the Canada Index; they also outshone the competitive Global Markets Index.

Although these are just a few instances, they shed light on why EdgePoint’s Canadian Equity fund stands out. EdgePoint continues to defy the norm, proving that focusing on Canadian stocks can be a fruitful strategy.

In a world where crossing borders for investment opportunities seems like the norm, EdgePoint’s story is a testament to the potential of looking closer to home and understanding the depths of your local market.

Source: https://www.morningstar.ca/ca/news/245632/edgepoints-the-exception-on-canadian-stocks.aspx