July 2021 | Caldwell Canadian Value Momentum Fund Commentary

July Recap: 

The Caldwell Canadian Value Momentum Fund (“CVM”) declined 0.2% in July versus a gain of 0.8% for the S&P/TSX Composite Total Return Index (“Index”). Over the year-to-date period ending July 31, 2021, CVM generated a return of 19.0% versus an Index return of 18.2%.1

Sector returns within the Index continued to have a wide range of outcomes. Consumer Staples (+7.1%) was July’s strongest performing sector as food retail stocks once again drew investor interest. Energy (-5.1%) saw its positive momentum stall and was the worst sector performer. Both sectors’ performance suggest that the market is concerned with potential impacts from the Delta variant.

Top CVM performers in July were Stelco (“STLC” +13.2%), FirstService (“FSV” +9.3%), and Converge Technology (“CTS” +5.9%).2

STLC continued to benefit from strength in steel prices. The company recently announced record quarterly results and a substantial and accretive share repurchase.

FSV reported strong earnings results late in the month with management noting that its acquisition pipeline remains active.

CTS continued to move higher following its new growth plan presented at its AGM in late June. Recent acquisitions have expanded product and services offerings and established a foothold in the European market. Despite the stock’s strong performance this year, it continues to trade at a discount to peers. Weakness in the CVM’s energy positions and auto parts suppliers offset the above mentioned gains.

Five stocks were added to the portfolio in July: ATS Automation (“ATA”), Spin Master (“TOY”), Advantage Energy (“AAV”), Trisura (“TSU”), and TFI International (“TFII”).

ATA designs and builds factory automation solutions. The company is seeing strong demand as companies increase capital spending and look to onshore supply chains. It has shifted its business mix towards life sciences and food & beverage end markets, which are experiencing secular growth tailwinds and are relatively less cyclical.

TOY is a children’s entertainment company with digital content and platforms increasingly complementing its toy product categories. The company's flagship brand is PAW Patrol, which is launching its first feature film later this month. The company expects the film to drive significant licensing and merchandising revenue.

AAV, a Montney gas producer, replaces other energy exposure within the portfolio given stronger company-specific catalysts around its Entropy carbon capture solvent. Note that, given the sector’s higher volatility, the CVM reduced energy exposure in early July following strong performance by the group.

TSU is a leading specialty insurance provider. The company is seeing both market and company-specific tailwinds to the business, including strong pricing and a long growth runway in it’s U.S. business.

TFII was repurchased in early July and the portfolio benefited from the news that the company is realizing benefits from its recently acquired UPS assets quicker than expected.

The Fund held a 17.7% cash weighting at month-end. The CVM has generated substantial value to 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 2021 and beyond.

1See Performance Comparison table (or page 2 of the PDF) for standard performance data.

2Actual Investments, first purchased: CTS 2/1/2021, STLC 10/26/2020, FSV 10/29/2020.

3Return since August 15, 2011 (Perf. Start Date): CVM  11.4%, Index 8.1%. | Returns are annualized for periods greater than one year. | Source: Morningstar

4Categories defined by Canadian Investment Funds Standards Committee (“CIFSC”).

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.

As the constituents in the CIFSC Canadian Equity category largely focus on securities of a larger capitalization and CVM considers, and is invested, in all categories, including smaller and micro-cap securities, we have also shown how CVM ranks against constituents focused in the smaller cap category. The above list represents 6 of a total of 389 constituents in the CIFSC Canadian Equity category.

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.

The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. For more information, see lipperfundawards.com. The CVM in the Canadian Equity Category for the 5-year period (out of a total of 74 funds) ending 7/31/2020 with corresponding Lipper Leader ratings of 4 (3 years) and 5 (5 years).

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: August 17, 2021.

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