Manager takes selective approach to Canadian small caps

“We are not dumpster-diving for cheap, broken stories. We want to make sure we are buying high-quality names and we’re not over-paying,” says BMO’s Tyler Hewlett

Michael Ryval 25 April, 2019 | 2:00PM
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While Canadian small cap stocks took it on the chin late last year, along with other equity categories they have rebounded and are more or less back to levels seen before the fourth quarter crash. Despite the recovery, growth-oriented manager Tyler Hewlett argues that current market conditions call for selectivity and avoiding excess risk.

“The fourth quarter was a classic risk-off environment,” says Hewlett, head of Canadian growth equities at Toronto-based BMO Asset Management Inc., and lead manager of the $342.5 million, 4-star rated BMO Canadian Small Cap Equity F series. “It started with a sell-off in growth names, globally. Technology, for example, had done very well. But the market viewed it as expensive and it had run too far. It turned into a sell-off that was characterized by fears for the global economy.”

The first quarter rebound is due in part to the fact that the market was over-sold. “Part of that is that some of the concerns are starting to abate,” says Hewlett, a 18-year industry veteran who graduated in 2001 from Queen’s University with a B.Comm and joined BMO Asset Management in 2007, where he oversees about $1 billion in assets, the bulk of which is held by institutional clients.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Kinaxis Inc189.22 CAD-0.66
Park Lawn Corp37.00 CAD3.01

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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