Canadian Small Cap Strategy

Canadian Investors

Overview

The strategy seeks long term capital appreciation by investing in a concentrated group of Canadian domiciled small/mid capitalization equities (market cap less than $3 Billion at purchase). Performance goal to exceed the return of the S&P/TSX Small Cap Index.

Investment approach

We employ a bottom up process to develop high conviction portfolios comprised of lasting, high quality companies which exhibit the following characteristics:

  • High returns on capital
  • Defensible business models
  • Industry-leading management teams
  • Strong, consistent free cash flow generation

Comprehensive research

Our subjective evaluation of management teams is a critical step in our process—and has many times proven to be our most effective predictor of future stock performance. Our extensive experience helps us to differentiate between good management teams and exceptional ones. We believe this is absolutely critical to delivering long-term results.

Based on a set of firm-wide values, we believe environmental, social, and governance (ESG) factors are key elements of our long term value to clients. As active investors, we must delve into each companies risk and opportunities, including those related to ESG. We believe that supporting responsible business conduct best protects our client’s capital.

Performance

Annualized Returns

as of December, 2021
Laurus CDN Small Cap
QTD
0.2
YTD
15.0
1 Year
15.0
3 Year
14.2
5 Year
6.4
6 Year
6.0
Since Inception
4.6
S&P TSX Small Cap Index
QTD
3.0
YTD
20.3
1 Year
20.3
3 Year
16.3
5 Year
5.7
6 Year
6.8
Since Inception
3.8

Returns for periods less than one year are not annualized. Data shows past performance and is not indicative of future performance. Current performance may be lower or higher than the data quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Inception date – August 2014.

Calendar Returns

as of December 31, 2021
Laurus CDN Small Cap
12/31/2021
15.0
12/31/2020
11.6
12/31/2019
17.9
12/31/2018
-13.2
12/31/2017
7.1
12/31/2016
14.0
12/31/2015
-2.0
12/31/2014
6.9
12/31/2013
35.4
12/31/2012
11.1
S&P TSX Small Cap Index
12/31/2021
20.3
12/31/2020
12.9
12/31/2019
15.8
12/31/2018
-18.2
12/31/2017
2.8
12/31/2016
38.5
12/31/2015
-13.3
12/31/2014
-2.3
12/31/2013
7.6
12/31/2012
-2.2

Returns for periods less than one year are not annualized. Data shows past performance and is not indicative of future performance. Current performance may be lower or higher than the data quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Inception date – August 2014.

Attributes

 

Performance:
  • Typically outperforms in flat or falling markets and in volatile market environments;
  • Typically underperforms in rapidly rising or strong speculative markets
  • Less volatility measured by standard deviation than its benchmark
  • Strong downside capture ratio
  • Turnover typically between 14-25%
  • High Active Share / High Tracking Error

 

CHARACTERISTICS:
  • Typical Sector Weights:
    • Overweight: Industrials and Information Technology
    • Underweight: Financials
    • No Weight: Utilities, Energy and Real Estate
  • Concentrated portfolio with 25-50 stocks; typically, 30-35
  • Weighted Average Market Cap: greater than the index and peers
  • Buy Range: $1 – $7 billion
  • Let the winners run up to $25 billion so long as thesis holds
  • Capacity evaluated at $6 billion; Hard Close at $7 billion
  • Benchmark Agnostic

For more information on the strategy please see our quarterly factsheet.
* Source: eVestment alliance in the eVestment Canadian Small Cap Core universe

Laurus Investment Counsel (“Laurus” or the “Firm”) is an independent investment management firm established in 2014 with a head office in Toronto, Ontario. Laurus is registered as a Portfolio Manager in most provinces in Canada and an Investment Adviser with the SEC. Our investment philosophy and proprietary, systematic process is based on fundamental equity analysis of world-class smaller companies. Today we manage a variety of specialized equity portfolios across a variety of capitalization bands for institutional and individual investors.

The Laurus Canadian Small Cap Composite inception and creation was August 2014 and represents an equity strategy managed in Canadian Dollars that utilizes a fundamental approach to invest by investing in a concentrated group of high-quality growth-oriented Canadian domiciled small/mid capitalization equities (market cap less than C$3 Billion at purchase). This composite has a minimum account size of $5 million.

The S&P/TSX SmallCap Index provides an investable index for the Canadian small cap market. The index is float adjusted and market cap weighted and was developed with industry input as the ideal benchmark for those with small cap exposure of the Canadian equity market.

The standard management fee schedule currently in effect is as follows: 0.70% for the first $25 million; 0.55% on the next $25 million; 0.45% on the next $50 million; 0.40% on the balance Actual management fees charged may vary depending on applicable fee schedules and portfolio size, among other things. Policies for valuing investments, calculating performance, and preparing GIPS reports are available upon request. Past performance is no guarantee of future results. Results will vary among accounts. The Canadian dollar is the currency used to express performance. Gross returns are gross of management fees, custodial fees and withholding taxes but net of all transaction costs. Composite net returns have been calculated by taking the highest management fee in effect for the respective period from the gross composite returns.

A list of composite descriptions and limited distribution pooled funds descriptions are available upon request. For all periods with 6 accounts or less do not present a measure of internal dispersion or the number of accounts included for the year.

Laurus Investment Counsel claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Laurus Investment Counsel has been independently verified for the periods September 1, 2005 until December 31, 2020. The verification report(s) is/are available upon request.

A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

GIPS Disclosures

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EMAIL
info@lauruscounsel.com

TOLL FREE
844-430-5501 (toll-free)

VISIT
161 Bay Street, Suite 3950
Toronto, Ontario M5J 2S1

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