As markets continue on a dynamic trend, fixed income portfolio manager Crista Caughlin discusses the economy and factors that drove markets in the first quarter of 2024. In addition, the reemergence of a more typical correlation pattern between stocks and bonds, getting central banks off the sidelines, and the concern that markets may be being too complacent. Key points from this episode: Global growth improving, inflation moderating, and earnings relatively strongIn Canada, growth has improved although consumption remains weak when compared to the U.S.Moving with caution: strong data has begun to cause central banks to be cautious around timing of interest rate cuts—they want to be confident higher inflation is in the rear view mirrorStrong equity markets—a continuation of the 2023 technology-focused businesses doing particularly well, especially if they have a tie in to AI or semiconductorsToo much complacency? We may not have seen the full impact of higher interest rates, and you can see that in some areas we are seeing continued pressure (e.g., real estate, mortgage arrears, loan delinquencies) Host: Kevin Minas, CFA, Institutional Portfolio Manager Guests: Crista Caughlin, CFA, Mawer Portfolio Manager For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/podcast/quarterly-update-q1-2024-ep152 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: Twitter -  / mawer_invest LinkedIn -   / mawer-investment-management

Portfolio Manager Manar Hassan-Agha discusses the importance of position sizing in investing and how factors like behavioural biases, market structures, and optimal betting strategies under the Kelly Criterion can impact returns at varying position weights. The conversation explores limitations in precisely calculating probabilities and edges for stock investments and how frameworks and checklists can be used dynamically to thoughtfully consider odds, edges, and optimal sizing for investment decisions. This discussion highlights the various personas or strategies that investors can adopt in dealing with both the winners and losers in their portfolios. Many of the concepts discussed in this episode are the research and works of others. Manar talks through how we think about applying their lessons dynamically and from a first-principles basis to the day-to-day management of portfolios at Mawer. Key points from this episode: Lessen the emotional impact of a large loss on a single position with position sizingUse the Kelly Criterion to determine the optimal size of a bet, taking unpredictability into accountResist the instinct to embrace either nihilism or precision in investment decision-makingTailor position-sizing approaches to your own investment style and risk tolerance

Portfolio Manager Peter Lampert breaks down the decision to re-open the strategy to new institutional investors and the key inputs that determine the strategy’s capacity. In addition, “a tale of two acquisitions”: one head scratching, the other improving the investment thesis of the holding. Key Points From This Episode: Breaking down the decision to re-open the strategy to new institutional investorsHow the team determines the strategy’s capacityA puzzling acquisition by KDDI and a potential value creating acquisition by Novo NordiskEvaluating the implications of rising interest rates on real estate investmentsThe balance needed to sift through the hype around AI while still being open to opportunities Host: Rob Campbell, CFA, Institutional Portfolio Manager Guest: Peter Lampert, CFA, Mawer Portfolio Manager For more details and full transcript visit: [episode link] 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: Twitter - https://www.twitter.com/mawer_invest LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

In this episode, host Rob Campbell and 11 colleagues on the research team engage in a comprehensive post-mortem analysis, sharing candid reflections on their decision-making processes over the past year. This episode underscores the significance of learning from both successes and mistakes, highlighting the value of vulnerability and introspection within the investment team at Mawer. A Few Highlights: •  Investing before comfort in competitive markets is necessary for returns •   Less complexity in investment strategies often results in more alpha •  Significant market changes can take longer to affect companies than expected •  Large acquisitions are risky; patience in evaluation is key •  Leaning harder on inductive evidence and numbers for decision-making •  Understanding the importance of parent companies in investment decisions •  Finding a balance in analysis depth to retain key insights without becoming lost in the details Host: Rob Campbell, CFA, Institutional Portfolio Manager Guests: Christian Deckart  CFA, PhD, Mawer Deputy CIO, Portfolio Manager Mark Rutherford  CFA, Mawer Portfolio Manager Grayson Witcher  CFA, AB, Mawer Portfolio Manager John Wilson  CFA, Mawer Portfolio Manager Samir Taghiyev  CFA, Mawer Portfolio Manager David Ragan  CFA, Mawer Portfolio Manager Siying Li  CFA, Mawer Equity Analyst Jeff Mo  CFA, Mawer Portfolio Manager Curtis Elkington  CFA, Mawer Credit Analyst Peter Lieu  CFA, Mawer Portfolio Manager Asim Hussain  CFA, Mawer Equity Analyst For more details and full transcript visit: [episode link] 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: Twitter - https://www.twitter.com/Mawer_Invest LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

In this episode, newly appointed Fixed Income Portfolio Manager at Mawer, Brian Carney, shares his insights on global credit strategies. With over 30 years of experience in the investment industry, Brian discusses his career journey, the evolution of credit markets, and his perspectives on current market dynamics. He highlights Mawer's approach to managing credit risks and opportunities, detailing the new Global Credit Opportunity Strategy at Mawer.     Key Points From This Episode:   Brian Carney's extensive background in finance and credit markets   The evolution and current state of global credit markets   Introduction of Mawer's Global Credit Opportunity Strategy   Approaches to managing risks and capitalizing on opportunities in credit   Insights on fixed income strategies and market dislocations   Mawer's unique position and strategies in the investment landscape   Links: Mawer Investment Management

In this episode, Manar Hassan-Agha, co-manager of the Global Equity Strategy, joins host Rob Campbell to discuss applying the 'Moneyball' process in evaluating past investment decisions. They unpack the lessons learned from this approach, emphasizing long-term thinking in investment strategies. The conversation highlights critical insights from the Moneyball statistics, the importance of decision quality over short-term results, and the value of inactivity in investment management.     Key Points From This Episode:   'Moneyball' approach to evaluating investment decisions in global equity   Importance of long-term thinking in investment decisions   Understanding decision quality beyond immediate results   The role of inactivity and patience in successful investing   Insights from specific case studies, including Couche-tard and Wolters Kluwer   Reflections on past investment choices and their long-term impacts   Discussion on asset intensity in portfolio risk management     Links: Mawer Investment Management

In this episode, Kevin Minas sits down with Crista Caughlin, Lead Portfolio Manager at Mawer, focusing on the key economic developments of Q4, including growth levels, inflation trends, and the resilience of financial markets. They speak on the nuances of the Canadian bond strategy and the impact of these economic factors on portfolio management.   Key Points From This Episode:   Volatility in Q4 with notable declines in interest rates and inflation   Marginal changes in growth, with a slight downturn in Q4   Economic resilience despite rapid interest rate increases in 2022-2023   Inflation trends: a reversal in Q4, with rates moving lower than in previous quarters   Equity markets showing solid returns, led by large-cap tech companies   Fixed income market volatility and changes in central bank policies   Anticipated re-emergence of traditional correlations between bonds and equities   Adjustments in asset allocation within Mawer's balanced portfolios   Links: Mawer Investment Management

In this episode, Dave Ragan, co-manager for the EAFE large-cap strategy, speaks on the current state and future prospects of EAFE markets. He delves into Japan's market challenges and opportunities, examines the impact of global interest rates and economic conditions, and explores the decision-making processes in market volatility.     Key Points From This Episode:   Japan's historical challenges and current state in the EAFE portfolio   Chugai Pharmaceutical: A recent addition to the portfolio   Market dynamics in 2023: Interest rates and soft landing possibilities   Stock reactions to market volatility and decision-making process   Case studies: Nova Nordisk's success and Adyen's challenges   Risk management and diversification strategies in the EAFE portfolio     Links: Mawer Investment Management

Portfolio Manager Peter Lampert dives into the world of emerging markets, sharing what’s changed for the portfolio since last year, insights on where we’re seeing new opportunities (e.g., Brazil), and the impact of geopolitical risks in Eastern Europe. He also explores why we’ve reduced our weight and exposure in China and what a slowdown in emerging markets might mean for investors.      Key Points from this Episode:   Main drivers behind the portfolio’s rebound in performance from 2022   New additions from Brazil: Petro Rio, GPS, XP    China’s increased risk profile and potential implications for emerging markets    Softening demand and slowing global growth      Links:   Mawer Investment Management

Today on the podcast, Equity Analyst Michael Vogel discusses the importance of analyzing technological shifts beyond artificial intelligence and how these shifts can impact non-tech companies in the portfolio. Michael emphasizes the cultural approach to holding views lightly and shares examples of how the Research team navigates these changes.   Key Points From This Episode: - Tech changes, non-tech companies adapting, potential shifts - Image sensors improve, and Kodak sales rise steadily - Electric cars and gas stations coexist profitably - Positive impact of legal software and AI - Analyzing investment matrix, tech shifts, and shared research   Links: Mawer Investment Management

A recap of the quarter and our thoughts on the hard vs. soft landing debate. Highlights: Main drivers of the market pullbackInflation’s persistent “stickiness” and potential implications of “higher for longer” interest ratesHow are consumers faring?Asset mix updateLooking ahead—what’s on our radar

Main themes impacting the portfolio and the benefits of systematically tracking investment decisions. Highlights: Valuation considerations in a higher rate environmentHow (and why) we’ve started systematically tracking and analyzing our investment decisions Portfolio adjustments—adding AltaGas, exiting Enbridge and Agnico EagleQuick dive into Dollarama’s business model and some of the stock drivers

A look at the strategy a year on and why we think valuation should be more top of mind for investors. Highlights: Influence of big tech stocks on the U.S. market and associated impacts to the small and mid cap spaceThe AI theme continues—Elastic, Concentrix, ModernaWhy is the U.S. market more expensive compared to its developed market peers?Regional banks—what happened, the current state, and opportunities (e.g., First Citizens Bank)Identifying potential economic themes through a bottom-up lens—Insperity, Dollar General, XPELSome of the recent main performance drivers for the strategy—Winmark, Copart, Verisk, FLEETCOR, Global Industrial,  Donnelley Financial

How we approach finding new ideas in the widest investment universe. Highlights Eagles and vultures mental model—why idea generation is better enabled by one shared investment philosophy and knowledge base E.g., Novo Nordisk and Publicis What is the “Bathroom List” and its role in our investment process and ESG considerations—e.g., JDE Peet’sWhy nuance matters when incorporating scuttlebutt—e.g., PublicisHow we’re continuously refining and improving our processesCurrent emerging markets exposureA walk through our qualitative risk assessment checklistRecommended reads from Manar

Unpacking one of our key mental models around investing and managing risk. Highlights: What we mean by “non-predictive decision making”Examining the question, “what’s your outlook and how you are positioned accordingly?” through a non-predictive decision-making lensThe important difference between vulnerabilities and triggersVulnerabilities we’re paying attention to

Market drivers that stood out this quarter, where inflation is at, and an asset mix update. Highlights: How markets have been climbing a “wall of worry”Recalling Cisco Systems and considering implications around the current concentration of tech stocks in the S&P 500Our thoughts on the continuing rate hikes and “soft landing” scenarioHolding cash: what’s changed?

Top highlights from the team’s recent research trips and a few business models we’re excited about.   Highlights: Insights from visiting Norway, the Netherlands, Kazakhstan, India and some holdings—Equinor, AutoStore™, Ahold Delhaize, Adyen, Genmab, Kaspi, Weir, HDFC BankWhy we’ve been reducing our weight in China and our current thinking around regional exposuresThe unique competitive advantages of Compass Group and ChugaiCurrent and future implications of AI for the portfolio and different business models—NVIDIA, TSMC, ASML, Samsung, RELX, Wolters Kluwer, Teleperformance

A deep dive into key themes we’ve been focusing on, recent additions to the portfolio, and a few changes.   Highlights: Quick recap: What has changed with the portfolio since 2022?What we mean by “engaged owners” (and the difference they can make)Why we are looking for companies with lower durationHow we try to find a variant perception from the market—and some examplesRecent additions to the portfolio: Dermapharm, Donnelley Financial, Hikma, Ipsos, SoftwareONE, and TechnogymOur new approach to the reverse roadshow process

Why management teams matter, energy companies rarely meet our investment criteria, and JPMorgan and State Street differ from many regional banks.   Highlights Potential implications of the recent advancements in generative AIU.S. regional banking challenges and our exposureWhy we don’t currently own any energy sector companies in the portfolioA look at two holdings—one “old” and one new—Verisk and BorgWarnerOur observations on broader earnings results

Why genuine knowledge building and the ability to learn effectively in investing is difficult, and how we try to work around those challenges.   Highlights: Context setting: What does “epistemology” mean, and why did we get excited about it in relation to investing?What is knowledge? How do you create it? The two founding blocks: Inductive and deductive reasoningA contrast in knowledge approaches and evolutions—e.g., the airline industry vs. astrology The resonance behind the learning, trying to “win by not losing”How we aim to build knowledge by “closing the loop” on inductive learning: Journaling, timestamping, governance (and the Mawer Lab)Forecasting tournaments and “adjacent games”Also: Learning isn’t cost free Drawing from the wisdom of crowds—what conditions help foster learning within an organization?ChatGPT and AI: Potential implications for the learning process in investing