Q4 2022 - Letter to my clients

As we move into the new year, we want to and say thank you for your patience through some turbulence in the market. In retrospect, 2020/2021 saw many retail investors flock to very expensive technology companies. We asked our clients to avoid the noise and stay true to our (admittedly boring) investment philosophy and allow our partner portfolio managers to focus on purchasing high quality companies at a discount to their intrinsic value. Due to their very expensive prices, those tech companies that led the way in 2021 had a very poor showing through 2022. Companies like Snapchat, Netflix, and Tesla all saw max drawdowns in the range of -70% to -88% from their highs in November of 2021. A Tech heavy fund that holds the aforementioned companies ended the 2022 calendar year down -29.65%.  This all led to 2022 seeing the worst calendar year performance since the global financial crisis. In comparison, one of our most used global balanced funds ended the year down only -2.80% (see chart below). Not following the crowd reduces volatility.

We asked the global equity team what companies in the portfolio had contributed to this lower volatility and one name stuck out (as we used it in our Q2 2022 commentary)! Just as Tim Hortons added to the relative outperformance of this fund back in 2008, the new parent company has helped the fund performance once again!

It may be boring, but buying quality companies at attractive prices works.

Thank you again for your trust and confidence. We have full faith in our partner portfolio manager’s ability to navigate 2023 and are excited to see what it has in store for us!