Fund Performance Metrics: Benchmark Holdings

Benchmark Holdings indicates the overlap between the portfolio holdings and the benchmark set for the portfolio. The ‘active’ measure in the third column measures the percentage of the portfolio, as position weight, that differs from the benchmark index. It is a metric quantifying the level of active management within a portfolio. While this metric might not give a whole lot to an investor, investors allocating to investments with a higher portion of ‘active’ holdings typically expect a differentiated return profile relative to a passive or a benchmark-driven portfolio.
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Welcome to the world of dividends! She invests in dividends for clients at any stage of investing, but understands the extra motivation for dividends and stability as a person inches toward retirement. 

Last year, they were earning 4.8% on client funds invested in money market funds. This let them have the patience to ease into the market. Seeing more volatility in markets this year, which is good if you're seeking to deploy some cash. The yield on cash has come down significantly in the past year, especially in Canada with the BOC dropping rates. It's now only ~2.5%, and that's not enough to live on. So you're more attracted to investing in high-dividend-earning stocks.

Could we see more volatility in the market? Absolutely. She'd probably get 1/3 in now, and wait and see. On days when the market's taking a beating, buy more. And do it selectively. The pipeline space, for example, is still giving you about a 6% dividend yield. A name like Telus is also one to consider. Still some good opportunities for yield, without the crazy valuations. Selling some of those high-flying tech names at 30-50x PE and buying a utility at 20x PE, doesn't seem so expensive on a relative basis.

We're finally waking up as a country. It's amazing to see everybody coming together and talking about working together. Dropping barriers, like crazy taxes, to move products from one province to another. Those make no economic sense. Dropping them will unleash a lot of GDP right there. 

Great to hear the talk. He would like to see some action, which will probably come after the election. When it comes to Canadian infrastructure investment, there are some good companies out there and already trading at attractive multiples. And that's before accounting for any additional investments.

You really have to pick your spots. Have to make sure companies don't take on any fixed-price contract risk. Many have smartened up over the years and now structure contracts differently. Take a look at ARE. And ATRL, in consulting, is probably an even safer way to play in the space.

Debt Can Kill a Company

Endo International PLC filed for bankruptcy protection this week. This is the company that took over Canada’s Paladin Labs Inc. about a decade ago. Endo shares are down 91 per cent this year. The problem? Very high debt. Endo has US$8 billion in debt after a large acquisition spree. Cash flow in the past 12 months? Just US$80 million. It paid US$560 million in interest charges in the past 12 months. 

Cineworld Group PLC this week said it was “considering” bankruptcy. The stock is down 95 per cent in the past year. This company tried to take over Cineplex Inc. in 2020, with about the worst timing a company could have (just prior to the COVID-19 shutdown). It had about US$8.9 billion in debt at the end of fiscal 2021 including lease liabilities, more than 27x its 12-month cash flow. Bausch Health Cos. Inc., once Canada’s largest company, this week retained advisers to help “map out its future.” Its stock is down 81 per cent this year. It has US$22 billion in debt, and cash flow of less than US$700 million.

The lesson here: Debt can kill a company, sometimes quickly. Make sure the companies you own can service their debt. Times are not always great, and a company must be able to survive before it can prosper.
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Everything about this economy is good, except one thing: the president who is angry at everything except Putin (maybe him too) and his wrath has made investors so negative that they want nothing to do with stocks, sure that Trump will keep issuing tariffs that wipe out our wealth. April 2 could be liberation day when US investors are liberated if Trump gets his tariffs out of the way. Maybe.

As a stock picker, it's really important to get the top-down correct, and then do your bottom-up research. Looking across the sectors, if you're thinking bullish and recession, you want to think defensive. Grocery-anchored shopping centres across Canada are very defensive. Seniors housing is enjoying secular tailwinds, where demand is far going to outpace any new supply. 

Shy away from office space, which has a secular headwind with high vacancies. Doesn't expect any rent uplifts in that space anytime soon.