Bob, Steve and I just returned home from the annual roadshow which spanned 23 cities from coast to coast and included over 4500 financial advisors. First of all, I want to say thank you once again for the support and hospitality we received. It’s exciting to get out in front of our clients to discuss our current views and revisit our philosophy, and we were humbled by the record turnouts in nearly every city we visited.
Meeting face to face reinforces what is important to our clients – protecting capital being at the top of the list. A few slides in particular hit home with the audience (with lots of people taking pictures of the presentation). For those of you who missed us, here are the four most impactful slides:
1. The Cambridge philosophy
A review of our philosophy is always important. It shows what we focus on, which in turn defines what our clients can expect from us. One small change was the title of point three, now defined as “An ownership mentality.” We made this change to reflect the fact that we are large owners of our funds, but also the depth of our research. It is critical for our analysts to think about businesses the way long-term owners do.
2. This slide reminded many of how skewed the Canadian market can be at times. The periods of 1999, 2011 and 2016 highlight some very concentrated sector weights. When money is being managed for “relative” returns (using this benchmark) investors can be exposed to meaningful “absolute” risk.
3. Active share has become more of a common term, but it is something we truly focus on. As you can see below, the top holdings for our funds often look very different, not just from the index, but also from many of the largest mutual funds in Canada. In a world where demonstrating value becomes more important by the day, we believe investors will increasingly be looking for true active management.
4. When you look at the markets as a whole today, valuations in both the equity and debt side look to be extended. We recommend more cautious positioning today and are aligning holdings across the Cambridge suite accordingly.