Invesco Canada blog

Insights, commentary and investing expertise

Conviction key to long-term success


February 3, 2017
Subject | Active management | Trimark

We believe that high-conviction investing is key to generating excess long-term returns, and this belief guides our research efforts and investing decisions. There is academic research to support this, showing that among actively managed funds, those with high conviction managers tend to outperform. In this blog post I’ll explain why the Trimark Global Equities team invests with conviction, highlighting two extensive studies of portfolio managers and their returns.

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Why European banks are so unattractive


December 29, 2016
Subject | Active management | Institutional | Macro views | Trimark

Our Europe-focused mutual fund has consistently stayed away from investments in the European financial sector. Why? European banks and insurers tend to fall short of our measures of a quality business – based on our research, we believe they have lower growth profiles and lower returns on invested capital and tend to offer undifferentiated products. We have differed greatly from the index in this regard, and as a high-conviction investor, I’m very comfortable with that.

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The Trump win: What does it mean for portfolios?


November 15, 2016
Subject | Active management | Macro views | Trimark

In a stunning defeat to heavily favoured Democratic candidate Hillary Clinton, Donald Trump is set to become the 45th U.S. President in January. Trump achieved victories in states that, according to recent tradition, have preferred Democratic presidential candidates –   including Wisconsin, Michigan and Ohio. Not only did Trump capture more votes than Republican candidate Mitt Romney during the 2012 presidential election, but he also capitalized on Hillary Clinton’s inability to carry Democratic congressional districts where Barack Obama achieved resounding victories in 2012.

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The election ends with a Trump victory: Now the real work starts

One of the most tumultuous and unprecedented presidential election campaigns in U.S. history is now over, with Donald Trump ultimately emerging as the winner and Republicans retaining their control over both the Senate and the House of Representatives. But while we know who won, we don’t yet know what policy changes will come to fruition once the hyperbole of the campaign trail gives way to the reality of governing.

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How will a Trump or Clinton win impact global markets?

Market watchers are broadly anticipating a Hillary Clinton victory over Donald Trump in the upcoming U.S. presidential election. This campaign has been unpredictable from the get-go, so I think it is important not to make any assumptions and we base our portfolio decisions on an “either outcome” view. From a global equities perspective, here is how we view the upcoming vote.

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Putting out fires at Samsung


October 24, 2016
Subject | Active management | Trimark

Samsung Electronics Co., Ltd. has dominated tech and business media recently with news it was recalling its Galaxy Note 7 phones. Product recalls such as this are not unheard of, but the combination of safety concerns, the popularity of the product and the ongoing battle for mobile phone dominance made this case headline-worthy. Samsung is a top-ten holding in two of the funds I manage – Trimark International Companies Fund and Trimark Emerging Markets Class (as at September 30, 2016). Here is my view on the business impact of the recall and how we are approaching our weightings in the funds.

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Trump vs. Clinton: Views from a veteran U.S. investor


October 17, 2016
Subject | Active management | Macro views | Trimark

As the manager of a mutual fund focused on U.S. companies, I’ve been asked a lot recently about the upcoming U.S. election. The main question from investors, of course, is: What will be the impact of a Clinton/Trump win on the companies and sectors we hold in the fund? My short answer – very little, if any, impact.

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Brexit sell-off creates entry point

In the lead-up to the referendum on the U.K.’s continued membership in the European Union, certain British bookmakers were offering four-to-one odds on bets the U.K. would opt to exit, meaning they anticipated a mere 20% probability of a leave win. At the same time, both sides were running neck and neck in the polls, rationally implying around a 50% chance of a leave vote result. This opportunity to receive a profit equal to four times one’s initial investment on an outcome estimated to be 50% likely, while losing only one’s initial investment the other one time out of two was an obvious example of a mispriced bet. Similar to the U.K. bookmakers mispricing of the Brexit bet, the market occasionally misprices stocks, placing the odds either in favour of or against the investor.

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What will the impact of a “Brexit” be on European equities?

As “Brexit” dominates news reports and media commentary, there has been a significant sell-off in both U.K. and European equities ahead of the U.K.’s referendum on its continued EU membership. In addition, there has been significant depreciation of the pound. Despite this volatility leading up to the vote, I believe that either outcome will ultimately have little impact on the U.K. economy over the long term.

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Brexit

Gold miner worth the wait

Earlier this month, I attended the opening ceremony of a gold mine in Mexico, along with the governor of Guerrero state, several federal cabinet ministers and the chairman and the CEO of Torex Gold Resources Inc., the company launching the mine. I’ve been investing in commodities for many years, and my focus has always been on high-quality assets run by high-quality people. For me, Torex fits the bill.

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Four reasons why oil prices should normalize


April 25, 2016
Subject | Active management | Commodities | Trimark

When oil is trading at US$20–US$30, many energy companies are not profitable. When oil prices are that low, companies are operating simply to cover their cash costs – it can be very costly to restart a stopped oil well and companies stand to lose less money by continuing to produce, rather than ceasing production altogether.

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Emerging markets: The “trade of a decade”?


March 18, 2016
Subject | Active management | Institutional | Trimark

In a recent Bloomberg article, Research Affiliates LLC called emerging markets (EM) “the trade of a decade.” The article noted that long-term investors are currently presented with an “exceptionally cheap” opportunity, as the MSCI Emerging Markets (EM) Index has declined 30% over the past three years.1

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Biotech: A case study in quality


March 9, 2016
Subject | Active management | Trimark

I have spent my investing life evaluating the culture of innovation at companies in different industries. Innovation is necessary in every industry – but naturally more urgent in some than others. Because I seek out sustainable growth through innovation, I tend to hold a number of businesses in leading-edge industries – biotechnology, for example.

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The “flywheel” of quality innovation


February 19, 2016
Subject | Active management | Commodities | Trimark

My key investing goal is, and always has been, sustainable growth. In a rapidly changing world, I believe the best road to enduring growth is to embrace change – participate in it and, in some cases, lead the charge. How does a high-quality company do this? I believe it all comes down to building and maintaining a strong culture of innovation.

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Volatility in context: The retreat from U.S. equities


February 12, 2016
Subject | Active management | Trimark

It appears we have reached the give-up phase for U.S. equities. Concerns about the U.S. economy, various commodities, some currencies, U.S. politics, rapid change and global strategic issues have caused investors to throw up their arms in frustration and retreat to the safety of more predictable alternatives. Now is not the time to lose heart.

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Question: What is your outlook on the energy sector?

Our team doesn’t see much benefit in trying to predict volatile commodity prices. Rather, we value natural resource companies using a constant commodity price that tends to focus on the marginal cost of new production. The benefit of this approach is that it cancels out the “cloud of noise” associated with volatile commodity prices.

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Is Visa still everywhere you want to be?


February 3, 2016
Subject | Active management | Institutional | Trimark

We all know Visa. Many of us use it as consumers. But is it an attractive business for investors? Is the company growing? Is it adapting to new technology? We believe it is – particularly now. As always, our thesis revolves around the quality of the business and our quality criteria boils down to four things – what the Trimark Global Equities team calls our FORS approach.

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