February 2023 | Caldwell Canadian Value Momentum Fund Commentary

February Recap:

The Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) declined -0.1% in February versus a decline of -2.4% for the S&P/TSX Composite Total Return Index (“Index”). At the sector level, Consumer Staples, Industrials, and Real Estate were relative outperformers, while Materials, Information Technology, and Energy underperformed. The Fund provided greater downside protection relative to the Index, partly as a result of being overweight in the Industrials sector as well as being underweight in the Energy sector.

Top performers in CVM’s portfolio for the month of February were Stantec (“STN”, +14.3%), Ag Growth International (“AFN”, +10.4%), and CGI (“GIB.A”, +7.3%). STN exceeded earnings expectations in its latest quarter as a result of its favourable positioning to benefit from several secular shifts in the economy, including energy transition, on-shoring, and infrastructure buildout. AFN re-rated higher following its investor day event, as the market largely perceived it to be constructive for the company. Its management provided a positive outlook on the business, which was also supported by advantageous global agriculture fundamentals. GIB.A benefitted from higher demand for managed services and end-to-end solutions as a tightening economic backdrop has been driving customers’ focus toward achieving greater cost savings.

During February, the Fund initiated positions in Enghouse Systems (“ENGH”) and iA Financial (“IAG”). ENGH provides communications software for enterprise contact centers, telecom networks, public transportation, and public safety networks. It has a disciplined and value-accretive growth-by-acquisition model, which should benefit from increased acquisition opportunities as target companies’ valuations continue to decline amidst the rising interest rate environment. IAG is the fourth-largest life insurance company in Canada, offering life and health insurance, and savings and retirement plans. IAG has the most advantageous capital position among its Canadian peers, which should facilitate the company in pursuing constructive capital deployment opportunities and also allow it to continue its active share repurchases.

The Fund held a 24.5% cash weighting at month-end. While we remain mindful of the macro environment, the Fund employs a bottom-up investment approach designed to seek out attractive investment opportunities in any market. CVM has generated substantial value for investors over its long-term history driven by the combination of strong company-specific catalysts and a concentrated portfolio. We continue to look forward to strong results as we progress through 2023 and beyond.

Standard performance as at February 28, 2023:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: -5.5%, 3 year: 11.6%, 5 year: 7.9%, Since Inception (August 29, 2014): 7.9%.
S&P/TSX Composite Total Return Index: 1 Year: -1.2%, 3 year: 10.8%, 5 year: 8.8%, Since Inception (August 29, 2014): 6.2%.

Actual Investments, first purchased: STN 5/9/2022, AFN 7/25/2016, GIB.A 5/30/2022.

The CVM was not a reporting issuer offering its securities privately from August 8, 2011 until July 20, 2017, at which time it became a reporting issuer and subject to additional regulatory requirements and expenses associated therewith.

Unless otherwise specified, market and issuer data sourced from Capital IQ & Morningstar Direct.

The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Rates of returns, unless otherwise indicated, are the historical annual compounded returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

Publication date: March 17, 2023.