PenderFund

The Underappreciated Value of a Long-Term Orientation

Written on . Posted in Investment Insights

“I ask everybody not to think in two to three-year time frames, but to think in five to seven-year time frames.” – Jeff Bezos

Amazon is a remarkable enterprise that was built in part on an unwavering long-term orientation. Founder Jeff Bezos doesn’t care about quarterly earnings because he knows the near-term earnings simply reflect the actions and initiatives Amazon took years ago. He is always thinking about the direction of Amazon five to seven years out, rather than what is happening today. Such a perspective is highly unusual in the corporate world, but far more likely in founder-run firms. It is also important in the investment world. Thinking long term impacts how you plan and where you allot energy, time, money and resources. While we try to navigate the near-term twists and turns of the market, we keep three long-term considerations front of mind.

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Active Management – Demystifying the Canadian Stock Market

Written on . Posted in Insights & Ideas, Investment Insights

Index funds, or funds that passively track indexes, have a role to play in investor portfolios. Jack Bogle created the Vanguard 500 Index Fund in 1976, the first index fund. He had the most noble of intentions – to provide investors with the cheapest possible way to get exposure to the market index. The fund was structured as a unit trust, similar to a mutual fund, where pricing is set once a day. Then in 1993 the first Exchange Traded Fund (ETF – a marketable security that tracks an index, a commodity, bond, or a basket of assets like an index fund) was created by State Street Advisors. The S&P 500 Depository Receipts currently sits with $250 Billion in Assets Under Management. The structure of this instrument allows investors to trade the entire index in real time, just like a common stock on a stock exchange. These funds opened the door to passive instruments and passive funds now hold more than 30% of all US assets. Canadians are now also discovering that they can get broad market exposure for a fraction of the price that they have been paying and have begun to invest in index funds as well. This growth in index funds has created both opportunities and dangers for investors.

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Cash as a Strategic Asset Class

Written on . Posted in Investment Insights

At Pender, we are often asked about our cash levels because it fluctuates over time depending on the individual Fund mandate and the opportunity set. One of the common misconceptions regarding some Pender mandates is that most outsiders think we have generated good risk-adjusted returns despite holding cash. However, we are of the view that good risk-adjusted returns have been achieved because of the opportunistic deployment of cash over the cycle. Without that cash, it would be impossible to deploy capital when individual stocks drop and “fat pitches” suddenly become available, or when the market enters one of its recurring corrections and great opportunities become more widespread.

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A Better Way in Fixed Income

Written on . Posted in Investment Insights

There is no longer an “easy button” in fixed income whereby investors can earn relatively high real returns from invested instruments guaranteed by the government. While most investors still construct their portfolio with a mix of “ballast” and “earners” (fixed income and equities), many no longer expect to earn meaningful returns from their fixed income allocation. However, we believe that it can be done. Moreover, we believe that there should be a healthy part of investor portfolios assigned to credit instruments that can protect their principal well, while adding to the overall return of their portfolio. Investors no longer have to depend on equity markets to carry the full weight of their return expectations.

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2016 – Summary of Performance and Process

Written on . Posted in Investment Insights

Stocks rarely perform in the time frames we predict, which is why the market works best for investors who have a long-term portfolio focus. Volatility in short-term returns, especially with the relatively concentrated strategies we deploy, comes with the territory and we don’t place too much emphasis on it in any given year. Nevertheless, despite a bumpy ride as various macro events shook the markets, 2016 was a great year for Pender.

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The indicated rates of return are the historical annual compounded total returns including changes in net asset value and assume reinvestment of all distributions and are net of all management and administrative fees, but do not take into account sales, redemption or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. This content is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter and is provided for your information only. Every effort has been made to ensure the accuracy of its contents.