Director, Private Client Portfolio Management, Mawer Investment Management Ltd.
In the business
Be boring; make money. We’re long-only (ideally at least 10 years), and eschew the latest products and headlining sectors.
For an average portfolio, we’re 30% fixed income. We haven’t yet ventured into global securities, as we’ve found good credit quality in Canada at reasonable yield. Besides, we don’t court currency risk in this part of the portfolio. We prefer Canadian federal, provincial and corporate bonds—nothing below BBB. For example, Nav Canada has a corporate bond supported by taxing airplanes that fly through Canada’s airspace, the second-largest in the world. The company has a monopoly and is mandated to break even.
The remaining 70% is in long-only equities—North American and global large and small cap. We like small-cap Cineworld, the largest movie operator in the U.K. We love owning a business that effectively taxes popcorn and movies. We also look for companies in engineering, construction and supply that benefit from infrastructure opportunities.
We like Google’s product diversity, ongoing R&D and propensity to take calculated risks. Mawer-advised accounts own 82,155 shares. We also buy at reasonable valuations; overpriced companies like Facebook don’t fit the bill. Other companies, such as BlackBerry and Nokia, inhabit markets that are too competitive. We’d rather invest in Samsung, which competes against BlackBerry, Nokia and Apple, but also manufactures cellphone components for competitors. The Economist estimated every iPhone 4 attributed 25.6% of its component cost to Samsung.
I’ve been a fund investor with my own portfolio. I recently dropped my country bias. A lot of investors are excited about BRICs, but you can find solid companies in developed markets. For example, we like Unilever, the Anglo-Dutch consumer goods company, and Ireland’s Kerry Group, a global leader in flavouring additives used in many emerging-market products.
Kanupriya Vashisht is a Toronto-based financial writer.