March 2019 | Caldwell Canadian Value Momentum Fund Commentary

March Recap:

The Fund declined 1.6% in March versus a gain of 1.0% for the S&P/TSX Composite Total Return Index ("Index”). After a broad-based market rally in February, sector performance was mixed in March with Technology (+5.0%), Utilities (+4.3%) and REITs (+3.4%) leading, and Financials (-1.4%) and Consumer Discretionary (-1.4%) lagging.

Top CCVMF performers in March were Parkland Fuel (“PKI”: +10.9%) and Badger Daylighting ("BAD": +6.3%). PKI reported strong Q4 results and in-line 2019 guidance. The solid results helped ease investor uncertainty over a noisy environment that included volatility in energy prices, Alberta production curtailments and early innings of the SOL Group acquisition. BAD also had a strong Q4 report and reiterated 2019 guidance. The outlook remains strong driven by continued growth in the U.S. for infrastructure and utility projects. BAD is making solid progress on its strategic milestone of doubling the size of its U.S. business; we would not be surprised to see BAD set another 'doubling' goal once it reaches this milestone.

Despite this month's under-performance, we were once again encouraged to see the market return to rewarding company-specific fundamentals. Three of the Fund's four holdings that reported earnings in March (PKI, BAD and ATD.B) out-performed the market, with an average return of 7.8%. The CCVMF's strategy is built around company-specific catalysts and the best time for these to shine is around earnings. As such, we look forward to this upcoming Q1 reporting season.

No stocks were added to the portfolio in March. The team has been busy working through buy signals and added two new positions in April. While the buy list through Q1 reflected noise related to a macro-driven market, we are starting to see 'green shoots' that focus is returning back to company-specifics. We remain disciplined during this period and look forward to discussing purchases made subsequent to month end in next month's note.

The Fund held a 45.7% cash weighting at month end. The recent additions made in the Fund have lowered our cash position to approximately 35% at the time of writing. The fund 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 2019 and beyond.

We thank you for your continued support. 

The CCVMF Team

The Fund 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 Canadian Equity category largely focus on securities of a larger capitalization and CCVMF considers, and is invested, in all categories, including smaller and micro-cap securities, we have also shown how CCVMF ranks against constituents focused in the smaller cap category. The above list represents 6 of a total of 365 constituents in the Canadian Equity category and 5 of a total of 111 constituents in the Canadian Small/Mid 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. Publication date: April 18, 2019.

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.

*  Categories defined by Canadian Investment Funds Standards Committee ("CIFSC")