Annual General Meeting

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

  • The strategy has always sought to own attractively priced, quality businesses with competitive current dividend yields and strong dividend growth characteristics. In times of elevated volatility, it is important to abide by our time-tested investment philosophy and process.
  • We continue to emphasize prudence in our portfolio. Prior to the COVID sell-off, we had already been urging investors to stay prudent with their allocations – we were late cycle, the market had appreciated significantly, and it was an easy time to be complacent.
  • So how are we being prudent through this difficult time?
    • Sticking to our investment philosophy: buying high quality, dividend-oriented equities with healthy balance sheets, good free cash flow and earnings trends, that are trading at attractive valuations
    • Disciplined adherence to our research process, including recession use case analysis on each of our stocks
  • One area we continue to avoid: debt
    • Stocks with high debt ratios underperformed in the downturn. While we would expect stocks with more debt than equity to lead in a recovery, we would steer clear. If the slump is longer and more persistent than we expect, companies like these could suffer bankruptcy, resulting in a significant impairment to investor capital.
  • One area we continue to shop around: quality cyclical stocks
    • Stocks with large market exposure (or “beta”) underperformed our expectations. We see potential for these high-beta cyclicals to lead on the way back up. We would be discerning here and focus on those companies with high-quality balance sheets and the free cash flow to allow operational flexibility in market downturns.

Source: Blackrock, April 2020.

Any opinions and/or forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. There is no guarantee that any forecasts made will come to pass.