Morningstar Awards: 2013 winners announced

> Morningstar 2013 Foreign Equity Fund Manager of the Year — Paul Moroz, Mawer Global Small Cap Fund, sponsored by Mawer Investment Management Ltd. of Calgary

> Morningstar 2013 Domestic Equity Fund Manager of the Year — the team of Mark Thomson, Pat Palozzi, James Black, Stephen Arpin and William Otton that manages Beutel Goodman Canadian Equity Fund, sponsored by Beutel Goodman & Co. Ltd. of Toronto.

> Morningstar 2013 Fixed-Income Fund Manager of the Year — Michael Hasenstab and Sonal Desai, Templeton Global Bond Fund, sponsored by Franklin Templeton Investments Corp. of Toronto

> 2013 Career Achievement Award – Ian Soutar, vice chairman, co-founder, partner and portfolio manager at Pembroke Management Ltd. of Montreal.

Click here to see the complete list of winners.

At Mawer, deputy chief investment officer Moroz likes to describe the Mawer fund’s investment discipline by an acronym — QUARP — that stands for “quality at a reasonable price.” The objective of the Mawer Global Small Cap Fund is to invest for above average, long-term, risk-adjusted returns in equity securities of smaller companies from around the world. It holds a broadly diversified portfolio of wealth-creating companies with carefully screened management teams, bought at discounts to their intrinsic values.

Moroz employs a disciplined, research-driven, bottom-up process; his goal is to hold stocks for several years to allow for investor recognition and corporate growth, as well as to minimize transaction costs. As of Oct. 31, the Mawer fund showed a five-year average return of 22.9%. The fund has a low management expense ratio of 1.78%.

“The big story in global investing is diversification,” Moroz says. “You can crack the world of global small-cap stocks wide open. We are able to own some interesting things in regions such as Asia, where there is a different set of risks and opportunities.”

The Beutel Goodman Canadian Equity Fund also offers the attractive combination of low fees and steady returns. Research efforts are directed at identifying stocks that are trading at a discount to the company’s asset value or earnings power. The portfolio management team asks tough questions about strategy for profitable growth, examines a company’s track record and assesses how it has weathered recessions. The Canadian equity fund has a low management expense ratio of 1.38% and, as of Oct. 31, showed a five-year average annual return of 11.5%.

“We’re the beneficiaries of a value style that focuses on the mitigation of risk through in-depth research and investment in high quality companies that generate healthy free cash flow,” says Mark Thomson, managing director of equities for Beutel Goodman.

In assessing management teams in potential holdings, the team seeks managers who have proven to be wise allocators of capital and who have made decisions that have had a positive impact on long-term performance.

“We have a long-term time horizon and are not focusing on the vagaries of quarterly numbers,” Thomson says.

The goal of the Templeton Global Bond Fund is to provide a healthy level of income, while maintaining quality through a globally diversified portfolio of government bonds issued by such countries as Korea, Mexico, Ireland and Poland, many of which pay a higher interest rate than bonds issued by Canada and the U.S. The fund has built-in strategies to mitigate the potential risks associated with global investing and foreign currency exposure, as well as a low correlation to Canadian and global equity markets. As of Oct. 31, the fund had a five-year average compound annual return of 5.4%.

At 77 years of age, 2013 Morningstar Career Achievement Award winner Ian Soutar has been working in the investment business for 53 years and has been focused on growth-oriented small to medium-sized companies throughout his career. The Pembroke-sponsored GBC American Growth Fund that he spearheads has achieved a 7.4% average annual return for the 20 years ended Oct. 31, 2013.

Soutar is committed to long-term value creation through a fundamental, bottom-up stock picking approach. His specialized growth investment style focuses on companies with a market capitalization of between $250 million and $2 billion. He likes each investment to make an impact, and typically limits the holdings in any one portfolio to 45 to 50 names.

He places much emphasis on corporate management teams in choosing stocks, and likes to meet company executives in person, check out the facilities, investigate references and talk to local residents to get their views on a company. He looks for a proven track record on the part of management and a high degree of stock ownership to show an alignment of interests.

“To get the returns we want, we need to focus on exceptional companies,” Soutar says. “We spend an enormous amount of time travelling to check out investment opportunities. It’s vital to our process to talk with the local community where a business resides and with its competitors.”

For more on Ian Soutar, see Uncovering the execeptional in the December 2013 issue of Investment Executive.