We seek to outperform the S&P/TSX Capped Composite Index over a full market cycle by adding value through active stock selection while controlling portfolio risk.
We seek to build a diversified portfolio of 55–85 stocks that are undervalued relative to their growth potential, based on bottom-up, fundamental research. Valuations are conducted on a relative basis within each industry. The strategy is designed to be transparent and disciplined with the primary goal of delivering consistent performance.
The investment decision-making process is a disciplined, research driven, bottom-up process, which leverages the network of GE resources.† Our investment process begins by screening the universe of Canadian companies with market capitalizations greater than C$100 Million. We conduct quantitative analysis focused on P/CE Ratio, Cash Earnings Growth, and Yield. Other key metrics we evaluate include P/E, ROE, Reinvestment Rate, Earnings Revision, Earnings Momentum and Earnings Surprise. Detailed, fundamental company analysis, industry competitive analysis, and a macro-environment review further narrows the list of potential buy candidates. The analysts then seek a catalyst for each stock that will unlock the future potential of the company. The catalyst may be that the company is doing business in new markets, the introduction of a new product with excellent earnings potential, a new management team or acquisition. Generally what are believed to be the best ideas with the highest level of conviction are purchased for the strategy. This step yields a list of approximately 55–85 companies. The size of each position (subject to the described limits) is based on strength of conviction, the stock’s liquidity, and potential of the idea.
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