It is a good question. Our goal is to not only build, but more importantly, protect wealth over time. The fastest way we can fail in our goal is to lose money and it is why we are so focused on absolute and not relative returns.
Part of this approach is to limit exposure to areas of risk. In Cambridge Canadian Equity, Cambridge Pure Canadian Equity and Cambridge Canadian Growth Companies funds, we have very limited exposure to Canadian discretionary retailers and do not own Canadian banks at all. While this is very rare among Canadian mutual funds, we have no problems being different than everyone else when we think it’s the right thing to do. Without attractive risk / return potential, we will hold cash. Period.
On a more positive note, there are select businesses within Canada with operations that would benefit from a slowing economy. Those businesses would also be likely to experience a positive multiple expansion, providing further upside if that scenario plays out.