In this episode, we discuss the defense industry's evolution with equity analyst Joshua Samuel. He highlights the historical underinvestment in European defense, the recent increase in defense spending, particularly Germany's program, and the strategic importance of land systems. The conversation highlights how the current geopolitical environment has transformed defense from an underperforming sector to an investment opportunity, though valuations for companies like Rheinmetall now reflect much of this potential. Key Takeaways:

• Historical Underinvestment: European military spending dropped dramatically from 2.75% of GDP during the Cold War to approximately 1.3% over the last decade. This resulted in significant inventory reduction (77% fewer tanks, 57% fewer aircraft) and industry consolidation.
• Germany's Leadership: Germany's substantial defense spending package has garnered attention, though not all European countries have the same fiscal capacity to increase military budgets at the same rate.
• Supply Chain Constraints: Decades of underinvestment created production bottlenecks that can't be solved quickly. Companies like Rheinmetall, which maintained investment during lean periods, are well-positioned with superior production technology and cost structures.
• Investment Perspective: European defense companies offer potentially higher growth opportunities than U.S. counterparts due to the lower baseline of European defense spending and greater headroom for increases. Companies with established platforms typically present lower investment risk than those developing new technologies.
• Strategic Autonomy: With the U.S. potentially reducing its global security role, European nations are recognizing the need for self-sufficiency in defense capabilities to protect their interests and sovereignty.

Host: Rob Campbell, CFA, Mawer Director, Institutional Portfolio Manager

Guest: Joshua Samuel, CFA, Mawer Equity Analyst

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social:

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https://www.linkedin.com/company/mawer-investment-management/

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In this episode, portfolio manager, Peter Lampert discusses international equities and the impact of tariffs on portfolio management. He provides insights into how his team has been preparing for potential tariffs since Trump's campaign, explaining that most of their international portfolio companies have limited export exposure to the U.S. and instead operate primarily in domestic markets across various regions. He highlights their strategic decision to exit positions that are heavily dependent on global trade, while maintaining confidence in businesses with resilient management teams capable of navigating economic uncertainty. He also shares personal strategies for maintaining a clear head during market volatility and points out some underappreciated silver linings amid tariff concerns.

Key points from this episode:

• How the international equity team prepared for tariff risks during Trump's campaign, viewing market reactions in February as too benign given potential economic impacts.
• Many companies in their international portfolio have minimal direct exposure to U.S. tariffs, with many operating domestic U.S. businesses or serving their local markets, like Compass (UK-based catering company with 60% US revenue).
• The importance of emotional discipline, especially during market volatility, and having a team structure that promotes rational decision-making.
• Potential silver linings that may have been overlooked by markets, including Europe's increased investment in defense and infrastructure, and China's opportunity to shift toward more domestic consumption.

Host: Rob Campbell, CFA, Mawer Institutional Portfolio Manager Guest: Peter Lampert, CFA, Mawer Portfolio Manager

This episode is available for download anywhere you get your podcasts. Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. 

Visit Mawer at https://www.mawer.com. Follow us on social: LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

In this Quarterly episode, Crista Caughlin, lead portfolio manager for Canadian bonds, and Jeff Mo, lead portfolio manager for U.S. midcaps, discuss market performance through Q1 2025 and the significant volatility that followed in early Q2—particularly after "Liberation Day" when the Trump administration imposed sweeping tariffs, followed by retaliation from other countries, and then a partial pause. The discussion explores how these trade tensions have created uncertainty affecting business confidence, consumer spending, and investment decisions. Crista explains that the growth outlook has worsened due to this uncertainty, regardless of whether tariffs ultimately reach 10%, 25% or are delayed. Both emphasize the team’s investment approach during this volatility relies on maintaining a disciplined process, avoiding "hero trades," and carefully modeling potential impacts on individual companies. Key points from this episode:

• The Trump administration initiated significant trade tensions in early Q2 2025 with "Liberation Day" and the imposition of sweeping tariffs, followed by retaliatory actions from other countries, causing major market volatility before some tariffs were paused on April 9th (except those on China, which remain at 125%).
• Even before the full implementation of tariffs, business confidence and consumer spending were negatively impacted by uncertainty, with examples of furloughed workers, delayed investments, and cautious spending behaviors from both the private sector and government employees.
• Central banks are in a difficult "wait and see" position regarding interest rates as they cannot fully overcome the effects of a trade war but will try to help economies adjust while monitoring whether tariff-induced inflation becomes structurally embedded.
• The asset mix committee has maintained a neutral position in equities throughout the volatility, with a slight shift from U.S. equities toward international markets (particularly Europe) to benefit from potential structural tailwinds.
• The investment team emphasizes maintaining adherence to a disciplined process during market turbulence.

Host: Kevin Minas, CFA, MBA, CAIA, Institutional Portfolio Manager Guests: 

Crista Caughlin, CFA, Portfolio Manager

Jeff Mo, CFA, Portfolio Manager

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social: 

LinkedIn - https://www.linkedin.com/company/mawer-investment-management/ 

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

Mawer President and portfolio manager, Jim Hall, discusses the current market environment and the team's approach to risk management. The conversation covers what triggered the vast volatility and uncertainty seen in markets, potential scenarios to come, and what the team at Mawer is doing about it. He emphasizes the importance of staying calm, being prepared, and diversifying portfolios to manage risks.

Host: Andrew Johnson, CFA, Institutional Portfolio Manager 

Guest: Jim Hall, CFA, MBA, President, Portfolio Manager

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social: 

LinkedIn - https://www.linkedin.com/company/mawer-investment-management/ 

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

In this episode, U.S. mid cap equity portfolio manager, Jeff Mo, discusses the market's sharp sell-off following President Trump's announcement of widespread tariffs on nearly all U.S. trading partners. He provides both short and long-term perspectives on potential economic impacts, including reduced business investment and consumer spending, while explaining that Mawer's investment approach during this volatility remains focused on preparation as opposed to prediction.

Key Takeaways:

• "Liberation Day" Tariffs - Trump administration announced widespread tariffs (10-40%) on most trading partners, surprising markets with their scope and scale.
• Market & Economic Response - S&P 500 dropped nearly 5% in one day with bond yields falling; concerns about negative impacts on global growth, business investment, and supply chains
• Consumer Sentiment Impact - Potential weakening of consumer spending due to market losses ("wealth effect") and general uncertainty affecting household financial decisions
• Investment Strategy in Volatility - Mawer's investment approach focuses on preparation over prediction, maintaining a portfolio of quality companies while making only marginal adjustments during market turbulence

Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager

Guest: Jeff Mo, CFA, Mawer Portfolio Manager

For more details and full transcript visit: https://mawer.com/the-art-of-boring/podcast This episode is available for download anywhere you get your podcasts. --

Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.

Follow us on social:

LinkedIn -  https://www.instagram.com/mawerinvestmentmanagement/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/

In this episode, we discuss the early months of the new U.S. administration with Grayson Witcher, lead portfolio manager for the U.S. equity strategy at Mawer. Grayson touches on the impact of tariffs, including the practical and unpredictable aspects of tariffs and how they influence decision-making. Grayson also shares insights on the potential long-term effects of the AI boom and highlights recent portfolio adjustments in response to evolving market dynamics.

Key Takeaways:

• The market initially surged post-election but has since reversed, with the S&P 500 dropping below election day levels. Policy shifts have hit sectors like pharma, defense, and life sciences. Volatility is rising, inflation concerns persist, and consumer caution is growing. [00:01:34]
• The current investment approach focuses on avoiding industries most exposed to tariffs, such as autos, agriculture, and luxury exports. Short-term risks include inflation and declining consumer confidence, while long-term consequences are harder to predict. Tariffs may push foreign competitors to innovate and expand globally. [00:07:01]
• When thinking about the impact of AI on the market, the U.S. equity team focuses on identifying at-risk industries and long-term beneficiaries. Instead of betting on specific AI technologies, they invest in broader themes. [00:15:45]
• While the portfolio remains largely stable, they have made minor changes due to advances in AI and current market volatility, exiting companies due to the anticipated impact AI will have on them. [00:17:33]

As global tensions rise and deglobalization trends continue, demand for enhanced border security and cargo inspection is increasing. A recent portfolio addition is OSI Systems, a security screening company specializing in cargo, airport, and venue security. [00:21:25]

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social: LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

In this episode, we discuss credit markets with Brian Carney, lead portfolio manager of the Mawer Global Credit Opportunities strategy. Brian touches on the tightening of credit spreads, risks in the leveraged loan market, and the limited compensation for high-yield bonds relative to their risks. He also reviews concerns about U.S. government credit quality, private credit profitability, and corporate policy shifts. Looking back on Mawer's GCO strategy performance in 2024, Brian highlights future plans for growth, process refinement, and team expansion.

Key Takeaways:

• Credit spreads are tightening across all markets, benefiting investors but reducing risk premiums. U.S.-centric policies support domestic companies, yet lenders may not share in the gains. Brian recommends investors avoid chasing yield in lower-quality or long-duration bonds.
• Collateralized Loan Obligations (CLOs) drive the $1.2 trillion leveraged loan market, with issuance surging in 2024. This leverage-heavy, opaque market raises concerns about risk-taking. If dislocation occurs, leveraged loans could suffer alongside high-yield bonds, making it a key area for monitoring.
• High-yield bonds offer 7% returns, but history shows adding even 25% to a portfolio can significantly increase downside risk. With only a 0.6% incremental yield benefit today, investors aren’t adequately compensated for the risk, making caution more prudent than yield chasing.
• Concerns include the U.S. government's credit quality, private credit’s profitability favoring managers over investors, and ensuring portfolio companies maintain long-term stability despite short-term policy shifts. Monitoring these factors closely remains a priority.
• Future plans for Mawer’s GCO strategy include expanding individual and institutional adoption, refining processes, leveraging technology, and selectively growing the team.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social: LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

In this episode, balanced portfolio manager, Steven Visscher, covers 2024 performance, asset allocation decisions, trade uncertainty, potential tariffs, and AI-driven productivity growth. Above all, he emphasizes long-term discipline, diversification, and avoiding emotional investment decisions in an unpredictable market environment. Key Takeaways:

• The balanced portfolio saw strong absolute returns in 2024, with all asset classes performing well. Despite early economic concerns, inflation eased without a recession. Relative performance lagged benchmarks, causing some disappointment.
• The portfolio maintained a neutral 60% equity target in 2024, trimming gains to manage risk. A key structural shift was introducing a 3% allocation to U.S. mid-caps, enhancing diversification and improving valuation metrics by targeting medium-sized companies with long-term growth potential.
• Tariffs and policy shifts are monitored but not pre-positioned for in asset allocation due to their unpredictability. Instead, adjustments occur at the security level, reallocating capital to businesses more resilient to potential trade impacts while managing risk within the portfolio.
• The impact of trade and tariffs on global growth, currency volatility, and policy responses, with heightened uncertainty in 2025.
• A potential productivity boom is emerging, driven by political shifts favoring deregulation and the broader integration of AI beyond tech giants into operational efficiency.
• In the face of uncertainty, staying diversified and committed to a long-term strategy is key. Avoid emotional decisions, resist short-term speculation, and trust in a disciplined approach that has proven effective over time despite market fluctuations. Keep perspective and stay the course.

Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager Guest: Steven Visscher, CFA, Mawer Portfolio Manager, Balanced

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social: LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/ 

In this episode, we discuss the escalation of U.S./Canada tariff tensions with Mark Rutherford, co-manager of Mawer’s Canadian equity strategy. Mark provides historical context of how we got here; highlights the potential economic impact tariffs may have on the Canadian economy; provides specific portfolio holding examples of how businesses and industries may be affected; and mentions several potential benefits for Canada. Ultimately, he stresses that adhering to a disciplined, long-term investment approach is vital amid uncertainty. Key Takeaways:

• In the U.S., manufacturing’s decline has driven trade and financial deficits, exacerbated by a strong dollar. Tariffs aim to correct these imbalances.
• Being diversified and adjusting portfolio positioning from a bottom-up and scenario planning lens is key amidst uncertainty.
• Tariffs could cause a potential Canadian recession, a weaker dollar, and lower interest rates. The team is monitoring U.S. dollar strength, risk havens, and possible global currency interventions while assessing the broader economic impact of tariffs on prices and growth
• On the flip side, Canada could benefit from reduced internal trade barriers, increased infrastructure and energy projects, and greater political will to attract capital—potentially driving long-term economic growth, job creation, and higher tax revenues.
• For now, the recommendation is to focus on “prepare don’t predict,” maintain discipline amid market swings, avoid rash decisions, monitor exposures, and seek long-term opportunities.

Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager Guest: Mark Rutherford, CFA, Mawer Portfolio Manager For more details and full transcript visit: https://mawer.com/the-art-of-boring/podcast This episode is available for download anywhere you get your podcasts. --

Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.

Follow us on social:

LinkedIn -  https://www.instagram.com/mawerinvestmentmanagement/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/

In this episode, we discuss 2024's economic landscape and what to expect in 2025, with Crista Caughlin, lead portfolio manager of the Mawer Canadian bond strategy. Crista highlights U.S. and Canadian growth trends, central bank rate adjustments, housing market dynamics, equity and fixed-income performance, and political uncertainties. She also discusses Mawer’s asset allocation strategy, balancing risks with opportunities amidst shifting fiscal policies, trade tensions, and global economic developments heading into 2025.

Key Takeaways:

• The year 2024 saw resilient U.S. growth despite headwinds, while Canada faced weaker growth and higher unemployment. Q4 showed modest improvements in Canadian growth and employment, but inflation trends potentially shifted upward in both regions late in the year.
• In 2024, the Bank of Canada aggressively eased rates, cutting 175 basis points, responding to weaker growth and target-level inflation. The Fed eased more gradually, cutting 100 basis points, as robust U.S. growth supported higher rates. Both central banks aimed to shift from restrictive to less restrictive policies.
• Political changes in Canada and the U.S. have created uncertainty for fiscal policies and trade dynamics. Tariffs pose risks to Canadian growth and inflation. Central banks remain cautious, awaiting policy clarity while navigating trade and economic interdependencies.
• The Canadian housing market faces reduced pressure due to Bank of Canada rate cuts and proactive bank measures like extended amortization. However, 2025's higher mortgage renewals at elevated rates pose ongoing risks to household spending and economic growth.
• Equity markets posted strong 2024 returns, driven by a stronger U.S. dollar, AI growth, and financial sector strength. Fixed-income returns were flat in Q4 but solid annually, with tightening spreads and rising Canadian 10-year rates prompting a defensive portfolio stance.
• The asset mix committee maintained a neutral equity stance, underweight bonds, and overweight cash in 2024, balancing hard landing concerns with market momentum. Key 2025 themes include fiscal policy uncertainty, global deficits, higher neutral rates, and opportunistic portfolio adjustments to enhance diversification.

Host: Kevin Minas, CFA, MBA, CAIA, Mawer Institutional Portfolio Manager Guest: Crista Caughlin, CFA, Mawer Portfolio Manager, Fixed Income

For more details and full transcript visit: https://mawer.com/the-art-of-boring/podcast

This episode is available for download anywhere you get your podcasts.

--

Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.

Follow us on social: LinkedIn -   / mawer-investment-management  Instagram - / https://www.instagram.com/mawerinvestmentmanagement/