Mackenzie Minute: July 7, 2017
James Morrison, Associate Portfolio Manager on the Mackenzie Ivy Team, discusses how the Team’s investment philosophy helps to navigate developments in global markets.
JAMES MORRISON: The Canadian market has underperformed global markets, in part due to low energy prices, housing-related concerns and US trade talks. We don’t presume to know how those issues are going to play out, but our portfolios are not constructed with any particular outcome in mind. Obviously, near-term returns of the fund would benefit if we had a quick rebound in oil prices or if US trade talks were positive, but if those things don’t happen, that’s perfectly fine with us and the reason why we believe that is because we’re invested in high quality businesses that think long term and they maintain strong balance sheets so they’re better positioned to navigate their way through unexpected market disruptions.
We think about returns over a full market cycle and the reason why we do that is it allows us to incorporate into our outlook, not only the performance through a growing economy, but through a recession as well. Think about if you were to run a marathon. You wouldn’t be very happy if you were the first person to the half-way point, but you compromised your ability to finish the race. It’s important to finish the race and get a good time and those are basically our objectives at Ivy.
Every cycle is different and one of the things that we think may help define the next cycle is an accelerated pace of change driven by technology. With change can come disruption and companies that rest on their previous success are the most vulnerable to that disruption. Think about the impact that Uber has been able to have on the taxi industry. We think that this pace of change plays into our favour at Ivy because we spend a lot of our time looking for companies that think about how to protect themselves from that kind of disruption and think about long-term sustainable growth versus simply maximizing short-term performance.