Here’s to number1!
Last week we mentioned that we would bring you additional colour on our latest Pavilion report. So here it goes.
Pavilion (previously Brockhouse Cooper) keeps track of our performance relative to a group of peers in what they call the Canadian Small Cap Equity Universe. The latest report, as of June 2018, showed that we were ranked #1 in our peer group on a one-year basis and #3 on a two year basis, gross of fees. We show gross of fees in this communication to be consistent with how most managers report their numbers. We normally show after fees in our client communications to better reflect the experience that our clients actually enjoy.
The report also shows the Beta and R-squared (R2) of our portfolio for the 5 last years as it compares to our benchmark: the BMO Small Cap Index. Beta measures the volatility of a portfolio compared with that of a benchmark index. A beta greater than 1.0 indicates a portfolio which is more volatile than the index, less than 1.0 indicates that it is less volatile than the index. Our beta is 0.6, meaning that, despite participating in a volatile part of the market, namely Canadian Small Caps, our portfolio has almost half the volatility of the benchmark index. R2 shows how closely our portfolio is correlated to the index. An R2 close to 1.0 indicates that the portfolio is highly correlated with the benchmark index. Our R2 was 0.4, meaning that we have a relatively low correlation with our benchmark. We have always told you that we are different and this is a clear indication that we are. From the perspective of how this fits in with your investments, this is exactly what you want. We add much needed diversification to your overall assets.
Though our short-term numbers have been good, we want to spend a minute reminding our readers of our long-term track record. Those of you who have been reading us for years know that this is where we have always been focused. The inception of the Wutherich & Co. Composite dates to September 30, 2001. From this date, we’ve delivered an annual return of 11.8% after fees (13.4% before fees). We did this despite three major market downturns: The 2000-2002 dot com bubble burst, the 2008-2009 financial crisis and a 2014-2015 Canadian small cap downturn. This compares to the BMO Small Cap Index at 8.6% and S&P/TSX at 8.1% and shows the strength of our core investment philosophy in that it can make a big difference to our clients’ wealth over the long-term.
Though the last few years have shown significant ups and downs, in the long term, we have come out ahead. We remain confident that we can continue to do this for our clients in the future.
To view the complete Monthly Message and Factsheet click here