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Update – June, 2020
• Firm Update
• Key Mandate Review
• Concentrated Global Equities
• Small Cap Canadian Equities
BARRANTAGHInvestment Management
Update – June 30, 2020
• Firm Update
• Key Mandate Review
• Small Cap Canadian Equities
• Canadian Equities Income
• Economic Update
Architect Program
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Firm Update
2
FIRM PROFILE
• 100% employee-owned investment managers since 1995• 17 employees, firm ownership expanded to 6 employee-
shareholders• AUM: $1 Bn (private wealth, institutional, sub-advisory)• Fundamental quality value style
STRATEGIES OFFERED
• Balanced Mandates – active asset mix mgmt.• Fixed Income – Credit barbell + active duration mgmt.• Equity Strategies – Focus Portfolios (20 – 40 stocks in a
strategy):• Small Cap – quality/yield focus• Mid Cap – S&P TSX Completion Index• All Cap Cdn Equities • Income – yield focus• Global Equities – Global leaders + Special situations
FIRM UPDATE
Barrantagh celebrating 25 years in business!
COVID 19:• Operating remotely with full trading, portfolio accounting,
investment team and client service capability• Rotating limited office schedule & video conferencing
Diversification Strategies:• Small Cap – new prospectus fund launched in Q2/19
• ‘F’ Class – 1.0% MER, 12-year composite track-record• Mid Cap – reached 2-year track record end of Q2
ESG Integration Update:• Completed UN PRI signatory process (2019) & formalized BIM
Responsible Investing Policy
Sub-Advisory News:• Awarded new SMA mandate at key bank brokerage firm
broadening our offerings to 4 leading IIROC firms
Website Upgrade 2020:• Launched July, 2020• Improved navigation, functionality & content• Advisor Portal
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BarrantaghCompetitive Advantages
3
Barrantagh Outcomes
Investment Boutique ▪ 100% employee-owned & independent▪ Investing in small, mid-size & larger
companies with minimal trading impact▪ Integrated client-focused team
Quality/Value investing style ▪ Capital preservation/absolute returns▪ Low portfolio risk metrics
Fundamental bottom-up research ▪ Focused “Best Idea” portfolios▪ Low portfolio turnover
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Investment PhilosophyDefining Quality
IDEA GENERATION▪ Competitive advantages
▪ Industry leaders
▪ Pricing Power
▪ High return on capital
▪ Low capital intensity
▪ ESG Profile
INDEPENDENT VALUATION▪ Cashflow analysis
▪ Independent valuation
▪ Forecast use of leverage
▪ Quality reduces risk
▪ Buy/Sell Targets
MANAGEMENT INTERVIEWS▪ Aligned with shareholders
▪ Clear business strategy
▪ Record of value creation
▪ Low cost operators
▪ Conservative use of leverage
Capable Management
DEFINING
QUALITY
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OBSERVATIONS:Small Cap Canadian Equities
5
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6
-5
0
5
10
15
20
25
Rolling 5 Year Annualized Performance
Large Cap Median - 1 Small Cap Median - 2
Canadian Equity MarketsSmall Cap Median Beats the Large Cap Median 70% of the time Since 1985
1Evestment Large Cap Canadian Equity2Evestment Small Cap Canadian Equity
• Periods of small cap active manager underperformance are not persistent and as the shaded areas indicate the difference in performance for those periods was only 2-3%
Nortel/Tech Run-up
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Small Cap Median Manager Outperforms on ReboundsBeats the Large Cap TSX Composite on Market Recoveries
7
“Tech Wreck”
Recession Recovery
Credit Crisis European Debt Crisis
1 Yr Ended Jun. 2020Small Cap Median +1.6%TSX Comp. -7.5%
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8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
9/86 3/89 9/91 3/94 9/96 3/99 9/01 3/04 9/06 3/09 9/11 3/14 9/16 3/19
Growth of $100 Invested Since Jan/1985
S&P TSX Composite Large Cap Median - 1 Small Cap Median - 2
Canadian Equity MarketsGrowth of $100 since Jan/1985
1Evestment Large Cap Canadian Equity2Evestment Small Cap Canadian Equity
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Canadian Small Cap Universe Canadian Large Cap Universe Global Equity Universe ($C)
Barrantagh Small CapTSX Small Cap Index
Barrantagh Small CapTSX Composite Index
Barrantagh Small CapMSCI World Net ($C)
Strategy Inception Date: Jan. 1, 2008
RETURNS: Small Cap Canadian EquitiesStrong Performance vs. Large Cap Cdn & Global Equities (for Periods Ending Jun. 30, 2020)
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RETURNS: Small Cap Canadian EquitiesStrong Performance vs. Large Cap Core & Cdn Dividend Strategies (for Periods Ending Jun. 30, 2020)
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11
-10
-5
0
5
10
15
20
0 3 orFewer
5 orFewer
7 orFewer
9 orFewer
12 orFewer
15 orFewer
20 orFewer
Morethan 20
(%)
# Sell Side Analysts Covering
Stock Performance1,2 vs. # Covering Analysts
5 Year Annualized Return 10 Year Annualized Return
TSX 10YR CAGR = 4.7%
Barrantagh Small CapAvg. Analyst coverage: 7
TSX 60Avg. Analyst coverage: 18
Small Cap Canadian EquitiesInformation Advantage: Lack of Research Coverage Creates Opportunities in Small Cap
1 Study universe includes all members of the TSX Composite & TSX Small Cap Indices with 5 & 10-year track records2 Returns are for periods ending Aug. 31, 2018
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12
0
5
10
15
20
25
30
35
40
45
> $50bn $15 - $50bn $7.5 - 15bn $1.5 - $7.5bn $750M -$1.5bn
$400M -$750M
<$400M
(%)
Market Cap Exposure
Market Cap Distribution (%) (Jun. 30, 2020)
Large Cap Median Barrantagh Small Cap
Small CapSmall/Mid CapLarge Cap2
Small Cap Canadian EquitiesLarge Cap Managers Ignore Small Cap Opportunities
1 Large Cap Median = Evestment Large Cap Canadian Universe2 Market Cap buckets as defined by Evestment
Small Cap & Large Cap universes are mutually exclusive – Large Cap managers don’t own below $1.5bn. Overlap exists in the Small/Mid bucket - $1.5bn -$7.5bn.
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OBSERVATIONS:Diversification with
Small Cap Canadian Equities
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BarrantaghSmall Cap
Cdn. Equites1
Percentile Rank2
Annualized Return
11.6 1 1st Percentile
Standard Deviation
13.9 1 Lower Volatility than Median
Sharpe Ratio .76 1 Highest risk-adjusted return
Beta 0.54 1 Very Low risk vs. market
Treynor Ratio 19.6 1 Highest risk-adjusted return
Small Cap Canadian EquitiesRisk Statistics vs. Small Cap Canadian Equity (for Periods Ending June 30, 2020)
115
58
0
20
40
60
80
100
120
140
Upside Market Capture Downside Market Capture(%
)
Barrantagh Small Cap Canadian Equity
1 Since Inception Jan. 1, 20082 vs. Evestment Small Cap Universe
14
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Creating Minimum Risk (Optimal) PortfoliosCombining Barrantagh Cdn. Large Cap Equity Income & Small Cap
15
7
7.5
8
8.5
9
9.5
10
10.5
11
11.5
12
10 11 12 13 14 15
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity AllocationSince Inception (Jan./08) Risk Return
For Periods Ending Jun. 30 2020
100% MANAGER ‘X’
100% BARRANTAGH SMALL CAP
10% SMALL CAP
20% SMALL CAP
30% SMALL CAP
40% SMALL CAP
50% SMALL CAP
60% SMALL CAP
70% SMALL CAP
80% SMALL CAP
90% SMALL CAP
Total Portfolio Risk a function of:1. Weights (ω) of underlying components2. Risk (σ) of underlying components3. Correlation (𝜌) of components
Most large-cap Cdn. Equity managers are highly correlated (>0.9) – with each other and the index
Barrantagh small cap offers very low correlation with large cap (0.6) and indices
• Allocation can reduce overall portfolio risk + increase return
Increase returns, Minimal change to risk profile
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DIVERSIFICATION: Small Cap Canadian EquitiesPerspective on Allocation to Small Cap
16
40.0%
20.0%
10.0%
30.0%
“Typical” Client Asset Mix
Fixed Income Canadian Equities
Small Cap Global Equities
=> 5% - 15% Total Portfolio Allocation
Incremental addition of small cap shows optimal (minimum risk) allocations of 20% - 50% which would suggest 5% - 15% of a typical 60% equity/40% fixed client portfolio
16
5
6
7
8
9
10
11
12
11 11.5 12 12.5 13 13.5 14
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity AllocationSince Inception (Jan./08) Risk Return
For Periods Ending Jun. 30 2020
Increase returns, no change to risk profile
100% BARRANTAGH LARGE CAP INCOME
100% BARRANTAGH SMALL CAP
10% SMALL CAP
20% SMALL CAP
30% SMALL CAP
40% SMALL CAP
50% SMALL CAP
60% SMALL CAP
70% SMALL CAP
80% SMALL CAP
90% SMALL CAP
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DIVERSIFICATION: Small Cap Canadian EquitiesResults are Similar with Other Large Cap Managers
17
4
5
6
7
8
9
10
11
12
10.5 11 11.5 12 12.5 13 13.5 14
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity Allocation10 Year Risk Return
For Periods Ending June. 30, 2020
100% LARGE CAP
MANGER “Z”
100% BARRANTAGH SMALL CAP
30% SMALL CAP
100% LARGE CAP
MANGER “X”
100% LARGE CAP
MANGER “Y”
30% SMALL CAP
40% SMALL CAP
Increase returns, no change to risk profile
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SMALL CAP CANADIAN EQUITIES
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Small Cap Canadian Equity MandatePerformance at June 30, 2020
For Periods Ending
Jun. 30, 2020
YTD 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs 8 Yrs 9 Yrs 10 Yrs
BIM Canadian Small Cap Equity -3.6% 1.6% 3.0% 3.6% 4.9% 4.4% 3.8% 7.9% 9.6% 10.5% 13.0%S&P/TSX Small Cap Index -14.3% -10.1% -9.1% -4.6% -2.5% -0.2% -3.1% 1.7% 1.4% -1.2% 1.5%
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
BIM Canadian Small Cap
Equity 19.0% -8.9% 5.9% 19.8% -5.3% 17.3% 30.9% 18.5% 15.6% 35.0% 43.8% -22.9%
S&P/TSX Small Cap Index 15.8% -18.2% 2.7% 38.5% -13.4% -2.4% 7.6% -2.2% -16.4% 35.1% 62.3% -45.5%
Calendar Years => Barrantagh Small Cap outperformed
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Small Cap Canadian Equity MandateJunior Gold Miners: Underperforming/Volatile & Poor Commodity Tracking
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
May
-09
Sep
-09
Jan
-10
May
-10
Sep
-10
Jan
-11
May
-11
Sep
-11
Jan
-12
May
-12
Sep
-12
Jan
-13
May
-13
Sep
-13
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
Sep
-19
Jan
-20
May
-20
Cumulative Returns ~ 10 Years
TSX - SC Gold Gold Barrantagh Small Cap
Gold +127% (7.7% p.a.)
Small Cap Gold Stocks +80% (5.4%
p.a.)
Barrantagh Small Cap +381% (15.1% p.a.)
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TSX Small Cap Canadian Equity Contributions by Sector to Total Index Return
21
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Rolling 5 Year Average Contributions to S&P/ TSX Small Cap Index
Contribution to the S&P TSX Small Cap Index Total Return
Opportunities : Industrials contributed > 50%
Cyclical Uncertainty : Materials detracted > 60%
.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Barrantagh Small CapIndustrials vs. Materials Sector Allocation
% Industrials % Materials
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Profile: Small Cap Canadian EquitiesPortfolio at June 30, 2020
22
0% 5% 10% 15% 20% 25% 30% 35%
Industrials
Staples
Real Estate
Utilities
Energy
Health Care
Materials
Financials
Discretionary
Technology
Comm. Services
Barrantagh Small Cap Industry Weight vs. Index
S&P/TSX Small Cap Index Barrantagh Small Cap
CHARACTERISTICS
Number of Holdings 23
Avg. Market Cap $1.85 Bn
# Industry Sectors 9
Dividend Yield 3.3%
P/CF 9.6X
0
2
4
6
8
10
12
14
16
Historic P/CF
Barrantagh Small Cap
0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
4000%
4500%
0 - 500Mn 500Mn - 1Bn 1Bn - 2Bn > 2Bn
Market Cap Exposure
Barrantagh Small Cap
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Canadian Small Cap Equity PortfolioPortfolio at June 30, 2020
23
Portfolio Weight
Portfolio Weight
Consumer Discretionary Industrials
Diversified Royal 2.4% Aecon Group 3.4%
2.4% Badger Daylighting 3.2%
Consumer Staples Boyd Group 5.0%
Primo Water 4.9% Cargojet 5.7%
Jamieson Wellness 5.3% Calian Group 3.9%
North West Co. 4.2% People Corp. 2.4%
Premium Brands 3.5% Morneau Shepell 4.4%
17.9% 27.9%
Energy Real Estate
Gibson Energy 4.0% Minto Apartment REIT 4.3%
Parkland Fuel 3.2% Storagevault Canada 4.0%
Tidewater Midstream 2.2% Summit Industrial REIT 3.0%
9.4% 11.3%
Financials Utilities
Trisura Group 4.0% Boralex 4.1%
4.0% Superior Plus 4.0%
Health Care Transalta Renwables 3.1%
Andlauer Healthcare 5.8% 11.2%
5.8% Materials
Altius Minerals 2.5%
Intertape Polymer 3.3%
5.8%
Cash & Equivalent 4.3%
Total 100.0%
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CANADIAN EQUITIES INCOME
24
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Canadian Equity Income MandatePerformance at June 30, 2020
• Canadian Equity Income annualized returns for periods longer than seven years are an ex-cash carve out of our long-term balancedincome composite.
For Periods Ending
Jun. 30, 2020
YTD 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs 8 Yrs 9 Yrs 10 Yrs
BIM Canadian Equity Income* -16.2% -10.4% -3.1% -0.4% 2.0% 1.3% 0.9% 5.0% 6.1% 6.4% 8.1%S&P/TSX High Dividend Index -21.3% -14.4% -5.1% -2.1% 1.6% 1.4% -0.4% 2.9% 4.1% 3.3% 4.9%
S&P/TSX Composite -7.5% -2.2% 0.8% 3.9% 5.7% 4.5% 3.5% 6.8% 6.9% 4.9% 6.4%
6
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
BIM Canadian Equity Income* 24.4% -9.6% 5.0% 16.4% -7.8% 15.1% 20.7% 11.5% 12.7% 16.3% 33.3%S&P/TSX High Dividend Index 25.8% -10.8% 7.6% 28.4% -14.6% 5.2% 16.1% 7.6% 1.5% 13.7% 31.1%
S&P/TSX Composite 22.9% -8.9% 9.1% 21.1% -8.3% 10.6% 13.0% 7.2% -8.7% 17.6% 35.1%
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BarrantaghCdn. Equites
Income1
Percentile Rank2
Annualized Return
6.4 16 1st Quartile
Standard Deviation
12.6 10 Low Volatility
Sharpe Ratio 0.42 7 High risk-adjusted return
Beta 0.83 13 Lower risk than the market
Treynor Ratio 6.46 9 High risk-adjusted return
Canadian Equities IncomeRisk Statistics vs. Canadian Equity (for Periods Ending June 30, 2020)
1 Since Jan./20082 Versus Evestment Dividend Focus Canadian Equity Universe
92.2
73.1
0
10
20
30
40
50
60
70
80
90
100
Upside Market Capture Downside Market Capture
(%)
Barrantagh Canadian Equity IncomeSince Jan/2008
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Canadian Equity MarketDividend Income Matters!
1.7%
2.7% 3.0% 3.1%2.6%
1.9%
4.9% 4.5%
3.1%3.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2000 - 2004 2005 - 2009 2010 - 2014 2015 - 2019 2000 - 2019
S&P TSX Composite: Dividend Income a Substantial Part of Total Return
Dividends Capital Appreciation
27
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-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 Q1/18 Q1/19 Q1/20
%
Canadian Equity Yield vs. 10 Year Bonds
TSX Yield-10 Yr Bond Yield Barrantagh Cdn. Equity Income Dividend Yield
S&P TSX Composite Dividend Yield 10 Year Canada Bond Yield
Canadian Equity MarketEquities Yields are Attractive vs. Bonds
Canadian stock market out-yielding Canada 10 yr bond by over 2.8% - still near multi-year high
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Profile: Canadian Equities IncomePortfolio at June 30, 2020
29
0% 5% 10% 15% 20% 25% 30% 35%
Financials
Industrials
Comm. Services
Energy
Utilities
Staples
Real Estate
Technology
Health Care
Materials
Discretionary
Barrantagh Equity Income Industry Weight vs. Index
S&P/TSX Equity Income Index Barrantagh Equity Income
CHARACTERISTICS
Number of Holdings 23
Avg. Market Cap $32.1Bn
# Industry Sectors 8
Dividend Yield 3.9%
P/CF 8.1X
Barrantagh Cdn. Equity Income
S&P/TSX Equity Income
TSX Composite
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4.5
5
5.5
6
6.5
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7.5
8
8.5
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11 11.5 12 12.5 13 13.5 14
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etu
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Standard Deviation
10 Year Risk – Return Ending Jun. 30, 2020Vs. Evestment Pure Cdn. Equity Universe
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1
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6
%
Quarterly Dividend Yield History
Barrantagh Cdn. Equity Income Div. Yield
S&P TSX Composite Div. Yield
10 Year Canada Bond Yield
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Canadian Equity Income PortfolioPortfolio at June 30, 2020
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Portfolio Weight
Portfolio Weight
Consumer Staples Industrials
Premium Brands 3.7% Boyd Group 3.6%
Primo Water 3.8% Morneau Shepell 3.7%
7.5% Stantec 2.6%
Energy Toromont Industries 3.8%
Gibson Energy 3.1% WSP Global 3.4%
Parkland Fuel 3.4% 17.1%
TC Energy 4.5% Financials
11.0% Bank of Nova Scotia 5.2%
Industrial Alliance 2.7%
Communication Services Intact Financial 2.8%
Telus 6.3% Royal Bank of Canada 7.2%
Rogers Communications 5.7% Sun Life Financial 3.1%
12.0% TD Bank 7.1%
Information Technology 28.1%
Opentext 4.4% Utilities
4.4% Brookfield Infrastructure 3.3%
Real Estate Superior Plus 4.0%
Granite REIT 4.2% 7.3%
Canadian Apartment REIT 2.0%
6.2% Cash & Equivalents 6.4%
Total 100.0%
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ECONOMICS
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Outlook
World:
• Response has been quick
• Rate cuts, fiscal stimulus, monetary support, credit supports, regulatory burden relief
• Fiscal policy response expected to add 1.3% to global GDP
• U.S. Example – fiscal policy between $850bn to $1.2tn• The U.S. response is about 5% of current GDP
• In 2008 the response was $830bn or 6% of GDP
Canada:
• Announced $82bn response package or 3% of GDP
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Canadian Growth Stocks Valuation StretchedValue Investing Avoids Overvaluation
Source: WSJ, Hugo Ste-Marie, Scotia Capital
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Source: WSJ, Bloomberg
U.S. Growth Stocks Valuation StretchedValue Investing Avoids Overvaluation
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Working with You
• Why Small Cap Canadian Equities1. Adds low-risk alpha & yield to client portfolios
2. Diversification - reduce overall client portfolio risk (low correlation)
3. Exploit the opportunity in small cap stocks (limited sell-side coverage)
• Barrantagh Small Cap Canadian Equity Fund (F Class)
• Fund Code: BMI105, 1.0% MER
• SMA Min. Investment Small Cap: $50,000, Large Cap Income: $75,000
• Advisor Portal (barrantagh.com) Password: BMO1
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Contact (Vancouver):Robin Ferguson, Vice [email protected](778) 990-3445
Contact (Toronto):Alan Daxner, Senior Vice [email protected](416) 864-7958
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100 Yonge Street, Suite 1700Toronto, Ontario M5C 2W1
(416) 868-6295www.barrantagh.com