| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| 2025 |
|---|
| -9.2% |
Canopy Global Small & Mid Cap Fund delivered -9.2% net returns in H1 FY26, underperforming the benchmark by 15.8% due to broad market rotation away from quality stocks. The fund's portfolio companies delivered 9% weighted average earnings growth with over 1% in dividends, but suffered a 14% impact from PE multiple de-rating as 25 of 32 stocks experienced valuation compression. Quality was the worst-performing investment factor while volatile, lower-quality stocks significantly outperformed, particularly in the US where this dynamic exceeded 20%. The fund believes this reflects AI-driven capital flows and disruption fears that are overdone for their high-quality enterprise software and online classifieds holdings. Portfolio companies like Medpace showed strong fundamental inflection while Auto Trader faced temporary product rollout issues. Despite near-term challenges, forward return expectations remain comfortably above double-digit targets given attractive current valuations, with most portfolio companies trading near the bottom of their 10-year PE ranges while maintaining strong business fundamentals.
The fund invests in high-quality global small and mid-cap companies trading at attractive valuations, believing that underlying earnings growth will drive long-term returns despite short-term market rotations away from quality stocks.
Forward return expectations remain comfortably ahead of double-digit target even without assuming any recovery in PE multiples from currently depressed valuation levels. The fund believes the current setup for their portfolio of high-quality global SMID stocks is particularly attractive given broad PE multiple de-rating.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 4194.T, ASSA-B.ST, AUTO.L, AZEK, JHX, MEDP, MONC.MI, NEM, PTC, TREX, TW | AI, Enterprise Software, global, Japan, Quality, SMID Cap, valuation |
PTC MEDP AUTO LN TREX 4194 JP |
AI has driven significant market rotation away from quality stocks, with concerns about disruption weighing on enterprise software and online classifieds companies. The fund believes AI disruption fears are overdone for their portfolio companies, which are more likely to be beneficiaries than victims of AI adoption. Quality was the worst-performing investment factor in H1 FY26, with lower-quality and more volatile stocks significantly outperforming. This represents a continuation of quality underperformance reminiscent of the late 1990s dot-com era, driven by speculative investor behavior and thematic investing. Japan faces structural labor shortages driving increased mid-career hiring and workforce mobility. The country has a new pro-business Prime Minister and depreciating yen enhancing export competitiveness, though it faces labor shortages, inflation, and geopolitical risks with China. Enterprise software companies face investor concerns about AI disruption, particularly around AI agents displacing traditional interfaces and reducing barriers to entry. However, many providers digitize structured processes that AI cannot easily replace and are likely to benefit from AI integration. |
| Oct 28 2025 | 2025 Q3 | MEDP, TREX | Biotech, healthcare, innovation, Quality, small caps |
MEDP US TREX US MEDP US TREX US MEDP TREX |
The fund underperformed due to a market rotation favoring speculative small caps, but management remains focused on high-quality, cash-generative companies with durable growth profiles. Holdings like Medpace benefited from biotech innovation and clinical research demand, highlighting long-term opportunities in life sciences and industrial technology. The team expects quality small- and mid-cap stocks to regain leadership once speculative excess subsides. |
| Jul 15 2025 | 2025 Q2 | 4194 JP, DOL, EDEN FP, HEI, ICLR, WISE LN | Capital Allocation, Compounding, growth, Management Quality, Patience |
WISE HEI 4194 JP ICLR DOL CN EDEN FP |
The commentary emphasizes long-term compounding through ownership of exceptional businesses. Management focuses on capital allocation, reinvestment, and management quality. Short-term noise is de-emphasized. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
SoftwareThe software business is not dead, but many software stocks are facing repricing as growth gets picked off by AI changes and terminal values need to come down. The manager sees opportunities in slower growth, rule of 30 companies with strong margins and free cash flow that have been less appreciated but are now changing in valuation. |
SaaS Valuation Growth Margins Technology | |
| 2025 Q3 |
Innovation |
|
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
Compounding |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 28, 2025 | Fund Letters | Jack McManus | MEDP | Medpace Holdings Inc | Health Care | Biotechnology | Bull | NASDAQ | Biotech, Bookings, Cro, Margins, Outsourcing | Login |
| Oct 28, 2025 | Fund Letters | Jack McManus | MEDP US | Medpace Holdings, Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | — | Login |
| Oct 28, 2025 | Fund Letters | Jack McManus | TREX | Trex Company Inc | Industrials | Building Products | Bear | NYSE | construction, Decking, Housing, Macro, Remodeling, Sentiment | Login |
| Jan 15, 2026 | Fund Letters | Jack McManus | TREX | Trex Company, Inc. | Industrials | Building Products | Bear | New York Stock Exchange | Building Products, Competition, Cyclicality, Housing, Margins | Login |
| Oct 28, 2025 | Fund Letters | Jack McManus | TREX US | Trex Company, Inc. | Industrials | Building Products | Bull | NYSE | — | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | WISE | Wise plc | Information Technology | Consumer Finance | Bull | NYSE | Fintech, growth, Payments, Platforms, Remittances | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | HEI | Heico Corp. | Industrials | Aerospace & Defense | Bull | NYSE | Aerospace, aftermarket, compounding, Defense, Margins | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | 4194 JP | Visional, Inc. | Communication Services | Interactive Media & Services | Bull | NYSE | Digitalization, Hiring, Labor, marketplace, Networks | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | ICLR | Icon plc | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | healthcare, Outsourcing, research, Trials, valuation | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | DOL CN | Dollarama Inc. | Other | Specialty Stores | Bull | TSX | consumer, discount, expansion, Margins, retail | Login |
| Jan 15, 2026 | Fund Letters | Jack McManus | PTC | PTC Inc. | Information Technology | Application Software | Bull | NASDAQ | AI, Incumbency, Plm, Software, switching costs | Login |
| Jul 15, 2025 | Fund Letters | Jack McManus | EDEN FP | Edenred SE | Other | Consumer Finance | Bull | Euronext Stock Exchange | Benefits, growth, Networks, Payments, Regulation | Login |
| Jan 15, 2026 | Fund Letters | Jack McManus | MEDP | Medpace Holdings, Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Biotech, Bookings, Cro, Cyclicality, earnings | Login |
| Oct 28, 2025 | Fund Letters | Jack McManus | MEDP US | Medpace Holdings, Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | — | Login |
| Jan 15, 2026 | Fund Letters | Jack McManus | 4194 JP | Visional, Inc. | Industrials | Human Resource & Employment Services | Bull | New York Stock Exchange | Japan, Labor, Platforms, Recruitment, valuation | Login |
| Oct 28, 2025 | Fund Letters | Jack McManus | TREX US | Trex Company, Inc. | Industrials | Building Products | Bull | NYSE | composite decking, housing cycle, Margins, market share, repair & remodel | Login |
| Jan 15, 2026 | Fund Letters | Jack McManus | AUTO LN | Auto Trader Group plc | Communication Services | Interactive Media & Services | Bull | New York Stock Exchange | AI, Classifieds, Marketplaces, Pricing power, Sentiment | Login |
| TICKER | COMMENTARY |
|---|---|
| 4194.T | Visional's core business is BizReach, Japan's leading platform for matching mid-career professionals with employers both directly and via recruiters. BizReach continues to gain share, and now serves 3.2 million job seekers, 9,300 recruiters, and 40,000 registered employers. Revenue and operating profit have both grown by over 25% annually over the last five years. The business maintains a 40% operating profit margin. |
| ASSA-B.ST | Assa Abloy 0.6% |
| AUTO.L | Auto Trader, a UK-listed automotive classifieds platform, was the Fund's largest detractor. This reflected a combination of short-term factors unrelated to its half-year earnings release in November, which was a positive surprise. These included the rollout of its new Deal Builder product in late 2025, which triggered backlash from a small but vocal portion of its UK dealer base and threats of coordinated cancellations. While actual cancellations were well under 1% of its customer base, and management undertook rapid and extensive outreach efforts with dealers, this episode likely weighed on investor sentiment. |
| AZEK | this followed the acquisition of its closest peer, AZEK, by James Hardie |
| JHX | this followed the acquisition of its closest peer, AZEK, by James Hardie |
| MEDP | Medpace was the Fund's largest contributor in H1 FY26, having been among its largest detractors over the prior 12 months. Medpace is a US-listed clinical research organisation focused on small biotechnology companies. After four consecutive quarters of elevated project cancellations, Medpace delivered a strong inflection in fundamentals, reporting very robust net bookings growth in Q2 and Q3 FY25, alongside stronger-than-expected guidance for FY26. |
| MONC.MI | Moncler 0.6% |
| NEM | Newmont delivered +18% performance over the quarter, contributing meaningfully to portfolio returns as gold gained another 12%, taking its 2025 gains to an extraordinary 64%. |
| PTC | Consider the Fund's investment in PTC, a US-based software provider whose products are used by large industrial companies to design and manufacture complex products, including in the aerospace and defence industries. Designs must conform to precise engineering specifications and physical constraints – think of the components that go into an aircraft – with no scope for ambiguity or hallucination. AI is not a substitute for this business logic. |
| TREX | TREX Company, a leader in composite decking, was our biggest laggard in Industrials during the fourth quarter, as an increasingly competitive environment and weaker end-market trends led to poor Q3 results. TREX saw business fall off after Labor Day, which is inconsistent with results from other peers and surveys. It was quite surprising and may be a function of its higher DIY business. Regardless, this contradicts our thesis, so we exited the position. |
| TW | Tradeweb -1.4% |
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