Fourth Quarter | 2023

Download (PDF 205 KB)

(Includes Q4 2023 Series A and Series O Performance Overview)

Market Overview

The last quarter of 2023 was a stellar period for equity and bond markets with strong returns across both asset classes. Equities and bonds moved higher as bond yields decreased and market participants became increasingly optimistic about the possibility of central banks achieving a soft landing. At this point we have seen inflation wane without a significant effect on economic growth, the goldilocks scenario for markets, though the delayed effects of monetary policy may still be working their way through the economy. Central banks such as the Bank of Canada and U.S. Federal Reserve kept policy interest rates steady during the period and while it is by no means a foregone conclusion, the market is anticipating interest rate cuts in Canada and the U.S. in 2024.

With this backdrop, strong equity performance was broad-based as many sectors delivered positive returns. Growth-oriented technology focused stocks were among the greatest beneficiaries of lower discount rates, while the energy sector was held back by falling energy prices. From a regional perspective, China was a notable point of weakness globally given domestic economic challenges.

How Did We Do?

With an exuberant period for equity markets, the majority of our holdings posted positive returns in the quarter.

  • Technology focused companies such as and Microsoft as well as semiconductor companies such as TSMC moved higher on the prospect of discount rates falling and continued fundamental execution.
  • Two real estate-related holdings, commercial real estate broker Colliers International Group and asset manager Brookfield Corporation, performed strongly as bond yields fell and the market’s expectations for a soft landing increased.
  • Many of our bank holdings performed well including JP Morgan Chase, Swedish bank Svenska Handelsbanken, Bank of Montreal, and Royal Bank of Canada. Despite the positive quarter for banking stocks, we continue to closely monitor the industry as high rates can hurt loan demand and increase funding costs, while provisions for loan losses remain a concern.
  • Another strong performing company was manufacturer of premium coffee machines De’Longhi, as declining freight and production costs expanded margins and helped its earnings.

Despite the vast strength across markets, not all companies were able to ride the wave. 

  • Energy producers lagged as oil prices fell during the quarter including holdings in Equinor, Suncor Energy, and Canadian Natural Resources.
  • Some of our holdings in insurance brokerage and consulting firms such as Arthur J. Gallagher and Marsh & McLennan lagged at the end of the period as bond yields fell. The decline in bond yields impacts the return they can earn on their float, and lower inflation expectations impacts potential future revenue growth from new insurance plans. Another insurance broker, AON, saw declines as they announced an acquisition of a privately held mid-market broker.

The strong return for balanced investors is a testament to the power of discount rates, as market expectations changed for central bank policy rate cuts in 2024, both bonds and equities delivered strong positive returns.

At the end of November, we updated our asset mix targets and trimmed equities while also deploying some additional cash to bonds. With equities rallying at the time, we were concerned about the lagging effect of higher interest rates, and we felt a larger allocation to bonds would provide more resilience against a potential recession or period of economic weakness. While the market has become increasingly optimistic, we believe the prudent approach is to stay balanced and not be overly exposed to any one outcome.

Looking Ahead

A very simple model is that equity markets are driven in the short-term by four factors: earnings, rates, events, and investor sentiment. Looking ahead to 2024, war, regulatory actions, geopolitics, and new technologies have the potential to move markets. Investors seem hyper-focused on how central banks will manage rates and whether economic demand will remain as resilient as it has so far. Seven of the world’s ten most populous countries are headed to the polls in 2024. And to borrow from Benjamin Graham, Mr. Market’s notoriously fickle sentiment can change quickly.

Investing is often a humbling experience; so too is providing forward-looking commentary! Three months ago, the contents of this Looking Ahead section focused mainly on valuations and the risk that they had become rich amid signs that the global economy was weakening. In the short-term, given the fourth-quarter’s stellar returns, those comments have aged rather poorly.

Thankfully, our investment process doesn't solely rely on such broad-based macro assessments, and we are very mindful of keeping a balanced stance in the portfolio. Our focus is much longer-term and more bottom-up in nature. More precisely: identifying companies that can create wealth by generating returns on capital in excess of their cost of capital for many years by virtue of sustainable competitive advantages. When led by excellent management teams, the wealth-creating nature of these business models can be enhanced and extended. By focusing on companies whose goods and services provide genuine value to their customers, we inherently reduce (though can never eliminate) the risk that events or shocks fatally impair their business models.

We remain wary of valuation levels; though market expectations are pointing to a soft landing, history suggests this is not the only, nor the most probable, scenario that can play out. Monetary policy often works with a substantial delay and the full effects of this tightening cycle may not have been felt yet. We continue to ensure an appropriate margin of safety in our discounted cash flow models and lean into our stochastic approach to prepare for a variety of scenarios.

And regardless of how rates, events and sentiment evolve, over the long term, stock prices tend to follow genuine wealth-creation. As such, we continue to lean heavily into the durability of our philosophy and process in an effort to responsibly steward our clients’ investments through uncertainty.


This document is for informational purposes only. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts and the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mawer Funds are managed by Mawer Investment Management Ltd. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer.

This Mawer Quarterly includes certain statements that are “forward looking information” or “forward looking statements” (collectively, “forward looking information”) within the meaning of applicable securities legislation. All statements, other than statements of historical fact, included in this report that address activities, events or developments that the portfolio advisor, Mawer Investment Management Ltd., expects or anticipates will or may occur in the future, including such things as anticipated financial performance, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations, are forward looking information. The words “may”, “could”, “would”, “should”, “believe”, “plan”, “anticipate”, “expect”, “intend”, “forecast”, “objective”, “will” and similar expressions are intended to identify forward looking information. Undue reliance should not be placed on forward looking information. Forward looking information is subject to various risks described in the Simplified Prospectus, uncertainties, and assumptions about the Fund, capital markets and economic factors, which could cause actual results to vary and in some instances to differ materially from those anticipated by the portfolio advisor and expressed in this report. Material risk factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. The foregoing list of risk factors is not exhaustive.

All opinions contained in forward looking information are subject to change without notice and are provided in good faith and are based on the estimates and opinions of the portfolio advisor at the time the information is presented. The portfolio advisor has no specific intention of updating any forward looking information whether as a result of new information, future events or otherwise, except as required by securities legislation. Certain information about specific holdings in the Fund, including any opinion, is based upon various sources believed to be reliable, but cannot be guaranteed to be current, accurate or complete and is subject to change without notice.

Index returns are supplied by a third party—we believe the data to be accurate, however, cannot guarantee its accuracy. Index returns are sourced from FTSE Russell and BMO Capital Markets.

Performance returns for the Mawer Mutual Funds and benchmarks are calculated by Mawer Investment Management Ltd. These returns are historical simple returns for the 3 month, YTD, and 1 year periods, and annualized compounded total returns for periods after 1 year.

Non‑performance related material in this document reflects the opinions of the writer, and does not reflect fact or predictions of actual events or impacts, and cannot be relied upon for investing purposes or as investment advice or guarantees of any kind.

MSCI Disclaimer:The MSCI information may only be used for your internal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (

FTSE Disclaimer:London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2023. FTSE Russell is a trading name of certain of the LSE Group companies. FTSE® is a trade mark(s) of the relevant LSE Group companies and is/are used by any other LSE Group company under license. “TMX®” is a trade mark of TSX, Inc. and used by the LSE Group under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.