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London, UK, 11 May 2023
Edison issues update on Canadian General Investments (CGI)
Canadian General Investments has been managed by Greg Eckel at Morgan Meighen & Associates since 2009. He has a very patient and consistent fundamental investment approach, which has delivered significant outperformance over the long term for CGI's shareholders. Last year proved to be a difficult period, as essentially energy stocks were the 'only game in town' and the fund has an underweight position in this sector. Also, technology stocks, which had served CGI well over a multi-year period, fell out of favour with investors. However, 2023 has started well, the stock market has rotated and the fund's performance has benefited from its sector positioning. The manager is confident that CGI's current portfolio holdings are well-placed to get the fund back on track. While he does seek new opportunities, Eckel is mindful never to neglect his current holdings. He believes that very often, the best outcome is to do nothing, which is reflected in a very low portfolio turnover of c 2% in 2022 and a c 6% five-year average.
Canada's base interest rate appears to have peaked and inflation has declined considerably since mid-2022, helped by a lower oil price. However, economic activity is slowing as the effects of earlier rate hikes are feeding through. In an uncertain environment, where stock market volatility remains high, a diverse portfolio of high-quality companies should be in a relatively strong position to weather the storm.
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