TORONTO (Reuters) - A fast-growing Canadian boutique money manager that has beaten the benchmarks of many of its mutual funds says the country's concentration of resource companies makes it a challenging investment market.
Calgary, Alberta-based Mawer Investment Management Ltd has C$26 billion ($22.82 billion) in assets under management, up from just C$5 billion in 2008.
"We have obviously a lot of clients in Canada that want to have a portion of their investments in Canadian dollars, so we do," Mawer President Michael Mezei told Reuters. "But if you look at Canada from a global perspective, it's a relatively concentrated market. So we need to be cautious."
Mawer tends to shy away from companies heavily exposed to commodity prices, currency fluctuations, regulatory changes, or which have high debt levels and could suffer from higher interest rates.
Of Mawer's 10 mutual funds, three are exclusively Canadian, and one of those consists mainly of government and corporate bonds.
Its large-cap Canadian Equity Fund has outperformed the S&P/TSX Composite Index .GSPTSE over the last five years. Eighteen percent of the fund is in energy and materials, with Enbridge Inc (ENB.TO) the top holding in that sector at 2.4 percent of the portfolio as of Sept 30.
Mezei said some companies could withstand external influences. Among those are some service providers or management firms within the commodities sphere.
Mawer's small-cap New Canada Fund has also consistently outperformed the BMO Small Cap Index. Its five-year, annualized compound return, after management fees and expenses, is 23 percent versus 9.9 percent for the index.
Energy- and materials-related stocks make up 35 percent of that fund.
Mawer, whose motto is "Be boring, make money," has grown to become one of Canada's top 20 independent money managers, as ranked by Investor Economics. It is 28th among all Canadian money managers.
Last month, Mawer became Morningstar analysts' "choice fund company" for the second year running and received nearly a dozen other honors from the investment research firm. Last year, it also won five Lipper awards, including best equity fund.
($1 = 1.1396 Canadian dollars)
Editing by Jeffrey Hodgson and Lisa Von Ahn