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Global

COVID-19 vaccines provided hope, but variants disrupted supply chains and kept cities locked down.

Trump supporters storm the U.S. Capitol Building to protest the results of the 2020 election, resulting in hundreds of arrests.

Snowstorms and incredibly low temperatures took down the Texas power grid and left millions of people without electricity.

U.S. forces leave Afghanistan after 20 years of war and the Taliban returns to power.

Tokyo hosts the delayed 2020 Summer Olympics; Prince Harry gives up his royal title and Britney Spears gets her freedom back after 13 years of conservatorship.

Markets

As measured by the Consumer Price Index, Canadian inflation hit 3.4%,i while the U.S. rate hit an almost 40-year high at 7%.ii

U.S. Congress increases the debt ceiling to US$28.9 trillion to avoid a default.iii

A February 2021 auction of U.S. Treasury Bonds saw prices drop sharply due to a lack of demand before recovering.iv

Chinese regulation of tech companies wipes out over $1 trillion dollars of market capitalization.v

The Dutch TTF Gas, Europe’s liquid natural gas benchmark, went from €19.12/MWh at the start of the year to a high of €180.27/MWh on December 21, 2021.vi

Prices for “meme stocks” such as GameStop and AMC Entertainment Holdings are carried to new highs by day traders, while Robin Hood and Coinbase go public.

EdgePoint

EdgePoint introduced its first prospectus mutual fund since our November 17, 2008 inception. The fixed-income fund has a unique fee structure tied to the yield-to-maturity of a Canadian bond index. It’s another way we put our investors’ interest at the forefront. See here for more details.

In 2021, we recommitted to focusing our coverage efforts on the group advisors who exhibited like-minded behavior in 2020 (defined as low redemption rate and/or positive net sales).

Although we don’t focus on short-term performance, in 2021 our Canadian Portfolio, Series F posted a pleasing return of 42% vs. the S&P/TSX Composite benchmark at 25%.vii Meanwhile, the Global Portfolio, Series F kept pace, growing 20% compared to 21% for the MSCI World Index.viii In both cases, the Funds looked significantly different from their benchmarks, with active shares of 86% and 98% for the Canadian and Global Portfolios, respectively.ix We continue to approach investing with measured confidence and look towards the long-term to compound our clients’ hard-earned wealth.

i Source: “Consumer Price Index: Annual review, 2021”, Statistics Canada. https://www150.statcan.gc.ca/n1/daily-quotidien/220119/dq220119b-eng.htm.

ii Source: “Consumer Price Index: 2021 in review”, U.S. Bureau of Labor Statistics, https://www.bls.gov/opub/ted/2022/consumer-price-index-2021-in-review.htm#:~:text=From%20December%202020%20to%20December,of%203.9%20percent%20in%202020.

iii Source: Alex Aronovich, Dobrislav Dobrev & Andrew Meldrum, “Federal Debt and the Statutory Limit, November 2021”, Congressional Budget Office. https://www.cbo.gov/publication/57653.

iv Source: “The Treasury Market Flash Event of February 25, 202”, U.S. Federal Reserve, May 14, 2021. https://www.federalreserve.gov/econres/notes/feds-notes/the-treasury-market-flash-event-of-february-25-2021-20210514.htm.

v Source: Don Weinland, “Xi Jinping’s crackdown on Chinese tech firms will continue”, Economist.com, November 8, 2021. https://www.economist.com/the-world-ahead/2021/11/08/xi-jinpings-crackdown-on-chinese-tech-firms-will-continue.

vi EU Natural Gas, Trading Economics, https://tradingeconomics.com/commodity/eu-natural-gas.

vii As at December 31, 2021. Total returns, net of fees. Returns for periods over one year annualized. Since inception returns since EdgePoint Portfolio inception (November 17, 2008). All Series F. Series F is available to investors in a fee-based/advisory fee arrangement and doesn’t require EdgePoint to incur distribution costs in the form of trailing commissions to dealers.

EdgePoint Global Portfolio (EPGP)
YTD: 19.61%; 1-year: 19.61%; 3-year: 11.06%; 5-year: 9.57%; 10-year: 15.07%; since inception: 15.21%

MSCI World Index
YTD: 20.78%; 1-year: 20.78%; 3-year: 18.57%; 5-year: 13.66%; 10-year: 15.15%; since inception: 13.04%

EdgePoint Canadian Portfolio (EPCP)
YTD: 42.04%; 1-year: 42.04%; 3-year: 19.69%; 5-year: 9.96%; 10-year: 11.71%; since inception: 13.56%

S&P/TSX Composite Index
YTD: 25.09%; 1-year: 25.09%; 3-year: 17.52%; 5-year: 10.04%; 10-year: 9.14%; since inception: 10.20%

EdgePoint Global Growth & Income Portfolio (EPGIP)
YTD: 14.95%; 1-year: 14.95%; 3-year: 8.93%; 5-year: 7.94%; 10-year: 11.99%; since inception: 12.50%

60% MSCI World Index/40% ICE BofA Canada Broad Market Index
YTD: 10.89%; 1-year: 10.89%; 3-year: 12.80%; 5-year: 9.56%; 10-year: 10.39%; since inception: 9.68%

EdgePoint Canadian Growth & Income Portfolio (EPCIP)
YTD: 27.21%; 1-year: 27.21%; 3-year: 15.04%; 5-year: 8.58%; 10-year: 10.05%; since inception: 11.63%

60% S&P/TSX Composite Index/40% ICE BofA Canada Broad Market Index
YTD: 13.31%; 1-year: 13.31%; 3-year: 12.33%; 5-year: 7.52%; 10-year: 6.92%; since inception: 8.07%

Our portfolio benchmarks:

EPGP: MSCI World Index is a broad-based, market-capitalization-weighted index comprising equity securities available in developed markets globally. The index was chosen for being a widely used benchmark of the global equity market.

EPCP: S&P/TSX Composite Index is a market-capitalization-weighted index comprising the largest and most widely held stocks traded on the Toronto Stock Exchange. The index was chosen for being a widely used benchmark of the Canadian equity market.

EPGIP: 60% MSCI World Index/40% ICE BofA Canada Broad Market Index. ICE BofA Canada Broad Market Index tracks the performance of publicly traded investment-grade debt denominated in Canadian dollars and issued in the Canadian domestic market. The blended benchmark was chosen because the MSCI World Index is a widely used benchmark for the global equity market and the ICE BofA Canada Broad Market Index is representative of fixed-income opportunities consistent with the Portfolio’s mandate.

EPCIP: 60% S&P/TSX Composite Index/40% ICE BofA Canada Broad Market Index. The blended benchmark was chosen because the S&P/TSX Composite Index is a widely used benchmark of the Canadian equity market and the ICE BofA Canada Broad Market Index is representative of fixed-income opportunities consistent with the Portfolio’s mandate.

We manage our Portfolios independently of the indexes we use as long-term performance comparisons. Differences including security holdings and geographic/sector allocations may impact comparability and could result in periods when our performance differs materially from the index. Additional factors such as credit quality, issuer type and yield may impact fixed-income comparability from the index.

viii Ibid.

ix Active share is the percentage of a fund’s holdings that differs from the benchmark index.