In this episode we discuss the Canadian equity market with Mark Rutherford, co-manager of Mawer's Canadian equity strategy. Mark highlights the key drivers behind Canadian equities' strong 2024 performance, highlighting standout sectors like technology, financials, energy midstream, and gold. He also examines challenges in telecommunications and real estate, discusses risks from slower economic growth, inflation, and higher mortgage rates, and emphasizes strategic portfolio adjustments.

Key Takeaways:

• Canadian equities excelled in 2024, driven by strong performance in technology, financials, energy midstream, and gold companies. Elevated valuations now prompt focus on sustainable growth and identifying new opportunities.
• In 2024, banks benefited from moderated loan growth, margin expansion, cost controls, and strong wealth management and capital markets earnings.
• Canadian insurance companies transitioned to stable earnings through improved product mixes, rational competition, and capital efficiency.
• Industries facing challenges or weaknesses in Canada include telecommunications (regulatory pricing pressures, rising competition, and higher refinancing costs) and real estate (expensive debt refinancing, softer industrial demand, and slower rent growth).
• Looking ahead to 2025, key risks for Canada include slower economic growth, inflation-driven policy shifts, a weakening Canadian dollar, and higher mortgage refinancing rates.
• To maintain strong portfolio performance, the focus will be on recycling capital into undervalued opportunities, prioritizing bottom-up analysis, and consistently selecting companies with strong fundamentals, aligned management, and reasonable valuations.

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 - / mawer-investment-management Instagram - / https://www.instagram.com/mawerinvestmentmanagement/

In this episode, we discuss Mawer's EAFE large cap portfolio with Ian Turnbull, an equity analyst at Mawer. Ian explores the portfolio's diversification benefits, offering exposure to resilient, high-quality companies in 21 markets such as the Nordics, Switzerland, and Singapore. The team targets proven companies with strong moats and global leadership. Key holdings include Wolters Kluwer, BAE, and Chugai. AI's potential in healthcare R&D is highlighted, though regulatory hurdles persist. The team emphasizes balancing risks, leveraging themes like pharma innovation, defense, electrification, and AI, and addressing geopolitical uncertainties for a resilient, long-term portfolio.

Key Takeaways:

• The EAFE Large Cap portfolio provides diversification, mitigating risks like U.S. concentration and valuation fragility. It offers compelling opportunities in smaller, well-performing countries like the Nordics, Switzerland, and Singapore. The team's bottom-up approach targets high-quality companies, emphasizing resilience and long-term potential across 21 diverse markets.

• Mawer defines large cap as the top two-thirds of the MSCI EAFE Index ($11B market cap), favoring proven, resilient companies with established moats, economies of scale, and global leadership, tested through cycles and challenges.

• Highlighting a few key holdings, Wolters Kluwer's successful shift from print to digital boosted recurring revenue, customer stickiness, and margin expansion, with AI enhancing value creation and growth.

• Another top holding, BAE, benefits from stable government funding and high capital returns. With new management and growing defense spending, it offers strong growth potential, especially in Europe, amid rising geopolitical tensions.

• Chugai, a top holding in Japan, was once a distributor for Roche but has evolved into a key R&D engine, developing successful treatments like Hemlibra. Its GLP-1 partnership with Eli Lilly offers strong upside potential.

• AI in healthcare R&D promises faster drug discovery, optimizing early-stage processes and reducing costs, benefiting companies with strong R&D cultures while still facing regulatory limits in clinical stages. Valuation in pharma is complex, especially with competition in GLP-1s.

• The EAFE Large Cap team focuses on creating a resilient portfolio by balancing risks, seeking contradictions between holdings, and ensuring exposure to key themes like pharma innovation, defense, electrification, and AI, while monitoring geopolitical risks and tariffs.

Host: Rob Campbell, CFA,

Mawer Institutional Portfolio Manager

Guest: Ian Turnbull, CFA,

Mawer Equity Analyst

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 U.S. mid-cap landscape with Jeff Mo, manager of the U.S. mid cap equity strategy at Mawer. Jeff touches on risk management, emphasizing disciplined adherence to investment philosophy and the benefits of balancing risk and return through natural contradictions, like pairing discretionary consumer-focused SharkNinja with countercyclical firms such as FTI Consulting. Additional topics include preemptive risk management, maintaining an all-weather portfolio, and leveraging a robust inventory process to adapt. Key Takeaways:

• In a hot market, risk management means resisting the temptation to chase speculative trends or high-growth fads without competitive advantages. Instead, it requires disciplined adherence to an investment philosophy—prioritizing quality businesses with strong fundamentals and sustainable value.
• Purposeful diversification includes inherent contradictions, ensuring steady wealth creation across interest rate cycles by balancing companies benefiting from both low- and high-rate environments.
• Despite recent market volatility and election-related uncertainties, the focus remains on maintaining an all-weather strategy. The team continues to evaluate companies based on fundamentals and earnings, with no drastic portfolio adjustments needed during this time.
• Inventory is crucial for risk management, providing a range of high-quality, pre-analyzed options. Mawer's extensive, multi-stage inventory process ensures quick access to companies with competitive advantages, allowing for strategic, timely decisions based on evolving market conditions.
• To illustrate natural contradiction, Jeff shares details on specific holdings. SharkNinja's competitive edge lies in its rapid product development, allowing market share growth despite its consumer discretionary risks. To balance, the portfolio includes companies like FTI Consulting and CACI, which thrive in different market conditions, providing stability through natural contradictions.

Host: Rob Campbell, 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 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 key trends and positioning in credit markets with Brian Carney, lead portfolio manager of the Mawer global credit opportunities strategy. We touch on the year's strong performance driven by tighter spreads, higher yields, and emerging risks such as low risk premiums and the U.S. election. Topics include corporate issuance, fallen angels, and public-private credit convergence. Emphasizing capital preservation, Brian highlights portfolio positioning in high-quality, short-duration securities, such as North American bank bonds, while avoiding high-yield exposure.

Key Takeaways:

• Credit markets have performed well this year, driven by tighter spreads and higher benchmark yields, but risk premiums are historically low. Brian suggests investors prioritize capital preservation over chasing yield, avoiding high-yield bonds and long-dated credit. Post-U.S. election, vigilance is key amid potential policy-driven market shifts.
• Trends in the past quarter include fallen angels, commercial real estate risks, and potential high-yield defaults.
• An actively managed, absolute return credit strategy offers diversification, income, and potential capital appreciation while protecting against adverse credit and interest rate moves. It's ideal for long-term investors seeking alternatives to passive strategies and opportunities in volatile or distorted markets.
• Brian recommends investors view absolute return credit as a long-term allocation, not for market timing. Market dislocations are brief, and panic often prevents opportunistic moves.
• Mawer's portfolio is managed bottom-up, focusing on individual credit assessments to mitigate risk and seize opportunities. It prioritizes short-duration, high-quality holdings, avoids high yield, and ensures diversification with a maximum issuer cap of 10%, balancing downside risk and concentrated positions.
• Optimism abounds for long-term credit opportunities and future discussions on continued progress.

Host: Kevin Minas, CFA, MBA, CAIA

Mawer Institutional Portfolio Manager Guest: Brian Carney, CIM 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.

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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/

In this episode, we discuss the global equity strategy with Christian Deckart, chief investment officer and portfolio manager at Mawer. Christian stresses managing absolute risk over relative risk for better long-term outcomes and details Mawer's approach to risk management, focusing on decision-making, portfolio risks, and external factors such as government debt and rising rates. He also discusses adapting to AI trends, preferring companies leveraging AI applications over infrastructure investments. He emphasizes maintaining focus on fundamentals amid evolving global and technological landscapes.

Key Takeaways:

• Effective risk management begins with a sound decision-making culture, clear accountability, and thorough evaluation of securities, portfolios, and systemic exposures to avoid unintended biases.
• Market and portfolio vulnerabilities include rising government debt, interest rate shocks, hidden real estate losses, over-specialized economies, and investor psychology driven by greed and fear. Disciplined risk management and avoiding overreliance or shortsighted behaviors in markets are important keys to success.
• While AI and semiconductor stocks dominate attention, there are overlooked opportunities in the broader U.S. market, diverse, underappreciated companies that meet rigorous criteria at attractive valuations.
• Christian highlights investments with potential to leverage AI applications for competitive advantage and long-term profitability beyond initial AI infrastructure trends.
• While the global equity strategy's absolute performance in 2024 is strong, relative performance lags the benchmark due to its different composition, particularly the focus on stable, "boring" businesses versus high-growth sectors like AI infrastructure.
• Christian attributes the global equity strategy's underperformance to its broader diversification compared to the benchmark, with a larger focus on stable, recurring businesses and less emphasis on high-growth sectors like AI, particularly in the U.S. market.

Host Name and title: Rob Campbell, CFA Mawer Institutional Portfolio Manager Guest names and titles: Christian Deckart, CFA, PhD Director, Chief Investment Officer, 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.

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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/

In this episode, we discuss market insights with two representatives from the trading desk: Rita Tien, who trades the Americas from Toronto, and Peter Dmytruk, who trades Asia from Singapore. Rita and Peter highlight the complexities of trading, emphasizing the importance of regional differences and the role of the trading desk in executing investment decisions. They discuss the impact of the Japanese carry trade, the shift to T+1 settlement cycles in the U.S. and Canada, and the influence of ETFs and retail investors on market volatility. They also touch on the role of multi-strategy hedge funds and the challenges of managing market risks. The conversation underscores the need for long-term investment strategies and the importance of understanding market structures and dynamics.

Key Takeaways:

• The trading desk plays a critical role in executing investment decisions effectively, navigating market nuances and regional differences.
• Market events like U.S. elections and Fed rate decisions significantly impact markets, requiring traders to discern meaningful signals from noise. While short-term volatility is challenging, the focus remains on executing trades aligned with long-term strategies.
• The Japanese carry trade impacts markets, influencing businesses and structured products. Sudden market moves, like Japan's interest rate hike, highlight the importance of communication to assess potential impacts on investment theses.
• In the U.S. and Canada, the shift to T+1 settlement reduces settlement risk and margin requirements by accelerating fund transfers but adds complexity for global trades due to mismatched settlement cycles.
• Market volatility is influenced by zero-day options, high-frequency trading, retail investor activity, and leveraged ETFs. Retail-driven markets such as India, Korea, and Taiwan showcase momentum-driven dynamics, while recent SEC rules aim to protect retail investors and improve liquidity access for institutional players.
• ETFs significantly influence market dynamics, concentrating liquidity and volume, especially during closing auctions, where up to 20% of daily trading occurs. This impacts trade timing, crowding in top-weighted stocks, and creates potential price distortions affecting subsequent trading days.
• Multi-strategy hedge funds, or "pod shops," drive market overcrowding by leveraging similar strategies, such as M&A arbitrage or index rebalancing. This amplifies market risks, creates volatility during downturns, and provides opportunities for disciplined long-term investors amid rapid shifts.
• Crowded, momentum-driven trades fueled by leverage and quantitative models can create challenges for disciplined investors, though opportunities arise in volatility. Balancing exposure to popular names with underappreciated companies can mitigate risks while benefiting from structural market inefficiencies.

Host Name and title: Rob Campbell, CFA Mawer Institutional Portfolio Manager Guest names and titles: Peter Dmytruk, CFA, P. Eng. Trader Rita Tien Equity Trader 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.

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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/

In this episode, Mawer portfolio managers and analysts discuss what they fundamentally look for in a bank as an investment. Specifically, how they view banks and the industry trends, as well as local dynamics, and ultimately what makes each of these businesses both unique and attractive. David Ragan discusses Scandinavian banks, highlighting Handelsbanken's smart lending and DNB's stability. Josh Samuel analyzes DBS in Singapore, emphasizing its low cost of funds and high ROE. Grayson Witcher focuses on J.P. Morgan in the U.S., noting its strong management and unique financial assets, while Alex Romaines examines First Citizens Bank in the U.S., which capitalized on market turmoil. Mark Rutherford covers Canadian banks, noting their conservative strategies and high ROE. Siying Li discusses HDFC Bank in India, and Asim Hussain explores Mitsubishi UFJ in Japan, emphasizing their unique upward-sloping yield curve.

Key Takeaways:

• The ideal bank investment is stable, lends to reliable clients, and operates in a rational, well-regulated market. Diversification in lending, funding, and economic exposure helps prevent insolvency and builds resilience, crucial in a highly leveraged industry.
• The Scandinavian banking environment is stable and well-regulated, with rational competition and prudent lending. Banks like Sweden's Handelsbanken and Norway's DNB provide consistent returns, low loan losses, and steady growth, supported by smaller, consolidated markets and strong economic stability.
• DBS in Singapore sustains strong net interest margins and 15–16% ROE. Strong management boosts investor returns through higher payouts, reducing risks from limited growth in foreign markets.
• U.S. banks face intense competition with little brand differentiation, often competing on interest rates alone. While experienced in managing risk, they are vulnerable in recessions. Banks trade at lower valuations than other sectors due to weaker competitive advantage.
• J.P. Morgan stands out in the U.S. market due to its strong management, high returns, low leverage, and strategic acquisitions during downturns. It diversifies through unique assets, investment banking, and asset management, enhancing resilience.
• The U.S. banking industry is fragmented and competitive, with a history of crises. Fragility creates opportunities for well-managed banks trading below intrinsic value.
• Canadian banks are highly consolidated and operate with a leveraged model, lending and raising equity. They now generate significant revenue from wealth management and insurance, reducing dependence on loan spreads. Strong regulatory relationships foster stability, with banks earning attractive returns while supporting economic growth.
• HDFC Bank, India's largest private bank, has strong management and benefits from a growing economy. With low non-performing loans and high ROE, it continues gaining market share from public sector banks, despite short-term challenges from its recent acquisition.
• Mitsubishi UFJ, Japan's largest bank, has a rich history and significant market share. With an upward-sloping yield curve and a focus on digitalization, it stands to benefit from rising interest rates, driving potential profit growth despite past challenges in the Japanese banking sector.

Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager Guests: David Ragan, CFA, Mawer Portfolio Manager, Joshua Samuel, CFA, Mawer Equity Analyst, Grayson Witcher, CFA, AB Mawer Portfolio Manager, Alex Romaines, CFA, Mawer Equity Analyst, Mark Rutherford, CFA, Mawer Portfolio Manager, Siying, CFA, Mawer Equity Analyst, Asim Hussain, CFA, Mawer Equity Analyst

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/

In this episode, Peter Lampert, lead portfolio manager of the International Equity Strategy, discusses the recent Chinese stimulus and its effects on emerging markets. He highlights key long-term risks in China, including weak sentiment, regulatory challenges, and geopolitical tensions, while emphasizing the potential of companies like Tencent and Tencent Music. The conversation also covers Turkey's Bim, a discount retailer thriving amid economic uncertainty. Peter explains how the portfolio's success stems from stock selection, especially with stealth performers like Vietnam's FPT and Taiwan's IGS, and the importance of balancing macro risks with company-specific growth potential.

Key Takeaways:

•China's recent stimulus signals a shift from restrictive policies to boosting economic growth, leveraging the U.S. Fed's easing cycle to inject liquidity and stabilize the economy.

•The stimulus could mitigate three key challenges: weak consumer sentiment, regulatory uncertainty, and geopolitical risks. While long-term issues persist, the focus on growth reduces the likelihood of worst-case scenarios in the near term.

•Macro factors and bottom-up analysis are deeply intertwined in portfolio decisions. As risks shift, so do portfolio positions.

•Higher macro risks in China lead to applying higher discount rates and requiring better ROI. Growth projections for economically sensitive companies are adjusted lower due to structural challenges, leading to exits when valuations no longer meet the stricter risk criteria.

•Companies with independent growth drivers can perform well despite China's economic challenges, as they are less reliant on the broader economy and can thrive even in a weaker market environment.

•One example is Tencent, whose strong management, dominant WeChat position, and conservative monetization approach offer growth opportunities. Despite China's economic challenges, Tencent can pull monetization levers, making its valuation attractive amid broader pessimism.

•This year's strong performance of the emerging markets portfolio has been driven by careful stock selection, focusing on lesser-known "stealth performers" like FPT, IGS, and Aegis Logistics, which consistently generate shareholder value.

•Peter highlighted one such performer: Bim, a Turkish discount retailer. Bim has thrived despite economic challenges. With Turkey's economic outlook improving, Bim is positioned for long-term success as it continues to offer value to consumers.

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 episode, Steven Visscher, lead manager of the balanced strategies, discusses the impact of rising interest rates and inflation on the balanced portfolio in recent years, Mawer's disciplined and collaborative approach to portfolio construction, and the importance of having a long-term perspective. He spoke about recent changes and additions to the balanced portfolio and provided an update on the performance of the balanced portfolio thus far in 2024. Key Takeaways:

• Over the last four years, interest rates and inflation have had the most significant impact on the capital markets and the performance of the balanced strategies.
• Following a surge of inflation in 2022, central banks aggressively hiked rates, which led to the first meaningful loss in a balanced strategy since 2008.
• After being called into question in 2022, 60/40 portfolios bounced back in 2023 and 2024 following positive fixed income returns, helping support the overall balanced strategy.
• So far, the market recovery has been led by a narrow subset of businesses, most notably technology companies that are part of the euphoria around artificial intelligence (AI). These companies have experienced extraordinary returns and lifted benchmarks to new heights.
• However, some of the Mawer balanced strategies weren't heavily exposed to those industries and have continued to trail their benchmarks on a relative basis.
• Steven and his team think in a probabilistic way meaning that they are intellectually open to the fact that there are many scenarios that could unfold, and they want to have a certain amount of resilience regardless of the scenario.
• The neutral stance of the balanced portfolio reflects the uncertainty of the current environment. The team's base case scenario is that a recession may unfold over the next six to 12 months.
• A small portion of capital from the U.S. equity strategy, which is more heavily biased toward larger U.S. businesses, has been shifted to a fairly new asset class, the U.S. mid-cap segment due to a valuation gap.
• From a balanced perspective, the goal isn't to eliminate risk; it's to manage it.

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

Portfolio Manager Crista Caughlin discusses the economy and factors that drove markets in the third quarter of 2024.

Key points from this episode:

• In the third quarter, most central banks either continued cutting rates – like the European Central Bank and the Bank of Canada – or started cutting rates – like the U.S. Federal Reserve.
• Inflation risks have diminished and downside risks to growth and employment have increased, so central banks are responding with easier policy.
• Crista believes the Bank of Canada will continue to make 25 basis point cuts at future meetings, but a 50-basis point cut is potentially on the table thanks to the Fed's more aggressive cut.
• Because central banks are easing policy and the market expects them to continue to do so, the yield curve has started to normalize.
• All else equal, a faster, more aggressive central bank reduces the probability of a recession.
• The third quarter was a Goldilocks scenario. Growth was weak enough to allow central banks to ease policy, which is really good for bonds and interest-rate-sensitive equity sectors, but it was not so weak that there were obvious signs of a recession.
• Regardless of whether central bank easing corresponded to a recession or a soft landing, equities have historically gone higher and spreads tighter after the first central bank cut.
• One of the main questions on Crista's mind going into the fourth quarter: How long will growth and policy be tailwinds driving the markets?

Host: Kevin Minas, CFA, MBA, CAIA, Mawer Institutional Portfolio Manager Guest: Crista Caughlin, 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.linkedin.com/company/mawer-investment-management/ Instagram - https://www.instagram.com/mawerinvestmentmanagement/