So, our first step is to classify each company in order to define our investment universe from which each fund can draw. Sometimes this is a challenging task as companies are often buying and selling one another and can therefore move back and forth.
From that point, we perform portfolio construction activities in the same way for both funds. We divide up each market into larger, emerging and ancillary companies and then perform analysis on each company. The process we use to we analyse, construct and weight the portfolios is the same though each fund will reflect its own market opportunities.
I believe that SEED is the top performing unlevered Canadian equity ETF over the past year. Is that correct? What does it mean to be “unlevered”? And what would you attribute the success of this fund to?
Yes, that’s correct. We’re very proud of our track record.
“Unlevered” simply means we don’t borrow any money in the fund. Put another way, for every dollar in assets, we have a dollar in investments.
I think our success comes from a few factors. Firstly, we have a focus on this sector and our team is doing regular analysis and adjustments to the portfolio. Our background in trading volatile industries previously in our careers gives us a good foundation for investing in this market.
Secondly, we’ve found an approach that combines fundamental security analysis with quantitative portfolio construction and risk management techniques. We need to make sure we are not only investing in our best ideas, but doing so in a way that is mindful of price swings.
Finally, we are humble. We are willing to be wrong, or right at the wrong time! When that happens, we take corrective action and redouble our efforts. It’s important to respect the market. Investors have entrusted us with their money and we intend to take care of it as if it were our own.
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