Canadian Focused Equity: Seeking the best of Canada and the world
Jeremy Burge
Equity Portfolio Manager
Kathrin Forrest
Equity Investment Specialist

For advisor use only. Not for use with investors.

What does a uranium miner, software company and dollar store operator have in common?

They’re among the top decile of companies in the MSCI All Country World Index (ACWI) for total returns over the five years ending March 31, 2024. And they also happen to be Canadian companies: Cameco, Constellation Software and Dollarama. 


Some investors might be, but they may be more surprised to find out there’s more than a few Canadian companies in the top 300 of the nearly 3,000 companies from 50 countries in the global benchmark. Shopify, WSP Global and Loblaw are some of the others, as shown in the table below. It’s also worth noting that as of March 31, 2024, Canadian Natural Resources, Cameco and Imperial Oil are in the top 10 for returns in the MSCI ACWI’s energy sector, and Hydro One and AltaGas are in the top 10 for returns in the utilities sector for the same five-year period.

Canadian leaders

Canadian companies among the top 300 in returns
MSCI ACWI over 5 years from March 31, 2019, to March 31, 2024


Cumulative index return %

GICs sector




Information technology






Canadian Natural Resources




Constellation Software


Information technology


WSP Global






Consumer discretionary


Imperial Oil




Thomson Reuters




Fairfax Financial




Lundin Mining




Cenovus Energy






Consumer staples



Source: FactSet. GICS = Global Industry Classification Standard.

“Canada has many excellent, investable companies,” says Jeremy Burge, equity portfolio manager of Capital Group Canadian Focused Equity FundTM (Canada), which was launched in 2006. 

To underline the opportunity, Canadian Focused Equity, which can invest a portion of the portfolio outside Canada, has primarily derived its results inside the country, not outside.

As shown in the chart below, the engine of Canadian Focused Equity’s results over the past five years has been Canada. This is measured by the fund’s active contribution, or excess results achieved above the benchmark in a particular country. As you can see, the margin of results is clearly tilted to Canada, as is portfolio weight.

Home sweet home

The image contains a bar chart and a table. The table lists the portfolio’s percentage exposures in each country or region where the fund invests. Canada has the largest weighting at 58.04% followed by the U.S. at 16.85%, the U.K. at 5.34%, the eurozone at 4.96%, other Europe at 2.57%, emerging markets at 1.8% and lastly, Pacific Ex-Japan at 1.22%. The bar chart shows where Canadian Focused Equity derives its investments results by country and region as measured by the fund’s active contribution, or excess results achieved above benchmark. Canada leads with an active contribution of 17.66%, the U.S. is next at 3.30% followed by emerging markets at 2.64%, Europe at 1.59%, the U.K. at 1.27%, Other Europe at 0.58%, Japan at negative 0.03% and Pacific Ex-Japan at negative 0.39%.

*Excludes cash.
Reflects Canadian Focused Equity vs. S&P/TSX Composite Index 5-year attribution by region based on quarter-end data from March 31, 2019, to March 31, 2024. Sources: Capital Group, FactSet. 

“We’re doing what the TSX is attempting to do — produce superior Canadian equity returns in Canadian dollars for Canadians — but we do this by selecting different companies, in different amounts at different times to those offered in the TSX,” says Burge.

This is evident in the top 10 companies held by weight, or percentage of holdings, in Canadian Focused Equity as compared to the S&P/TSX. As you can see below, there’s only one shared holding between the two: Canadian Natural Resources. Further, three holdings in the fund’s top 10 are based outside of Canada.

“Nevertheless,” says equity investment specialist Kathrin Forrest, “the fund is firmly anchored to Canada.” 

Same core focus, different holdings

Top 10 holdings of Canadian Focused Equity and the S&P/TSX
As of March 31, 2024

Canadian Focused Equity

Weight (%)


Weight (%)

Canadian Natural Resources


Royal Bank of Canada


Tourmaline Oil


Toronto-Dominion Bank


Restaurant Brands International






Canadian Pacific Kansas City


BAE Systems


Canadian Natural Resources


Imperial Oil




Fairfax Financial


Canadian National Railway  


Brookfield Asset Management


Bank of Montreal




Bank of Nova Scotia  


Labrador Iron Ore Royalty


Brookfield Corporation







Source: Capital Group.

Interestingly, there’s not a single bank in Canadian Focused Equity’s top 10 and only one in the top 25 (Royal Bank of Canada is #11 as of March 31, 2024), compared to four in the benchmark’s top 10. 

“The purpose behind the ability to invest outside Canada is to improve the quality and diversity of your holdings and reduce the cyclicality, volatility and risk associated with the TSX,” says Burge. 

According to Burge, the reason to invest outside Canada and the S&P/TSX stems from the underlying composition of the benchmark itself. 

“The TSX lacks choice, depth, quality and/or exposure to important themes we like in a number of industry sectors, such as information technology, industrials and health care,” he says. 

 A good example of Canadian Focused Equity using non-Canadian companies to improve the quality and diversity of its holdings is in information technology (IT), a notoriously underrepresented sector in Canada compared to the U.S. — a scant ten domestic companies are in the Canadian equities benchmark, all IT services or software related. Canadian Focused Equity in turn, complements its IT investments with Taiwan-based TSMC and U.S.-based Broadcom, among others, with the previously mentioned in the semiconductor industry. 

The companies add single company, industry and geographic diversification as well as quality — in the form of dividends — to the portfolio’s Canadian IT companies. TSMC and Broadcom also expose investors to a newer important investment theme: artificial intelligence. 

“The goal is to combine the best of Canada with the best in the world,” says Forrest. 

Regarding cyclicality, volatility and risk, Canadian Focused Equity has been able to mitigate all three thanks to this broader regional scope, which allows portfolio managers to be more selective in Canada. To illustrate, a line graph below plots the upside, downside and blended capture ratios of the fund since its 2006 inception through March 31, 2024. The fund’s upside ratio shows it captures less upside than the TSX over time, but also less downside. When blended, anything above 1 in the upside/downside overall capture ratio suggests a smoother, more stable investment experience when compared to the TSX. 

“A lower downside capture than the TSX has always been important for Canadian Focused Equity and the chart shows just how well and consistently this has been achieved,” says Burge. 

Less downside  

The line graph plots the upside, downside and blended capture ratios of Canadian Focused Equity Fund since its 2006 inception through March 31, 2024. The fund’s upside ratio shows it captures less upside than the TSX over time, but also less downside. When blended, the fund’s upside/downside capture ratio has consistently been above 1 most of the time suggesting a smoother, more stable investment experience when compared to the TSX.

Canadian Focused Equity upside/downside ratio vs. S&P/TSX, lifetime (March 31, 2006 – March 31, 2024). The right axis reflects overall capture ratio data. Source: Capital Group.

“Providing a stable, smoother pattern of results is important to some investors. It may, for example, allow them to better maintain their investment course, avoid emotion-driven decisions, and help them achieve their financial goals with greater consistency,“ says Forrest. 

Of course, along with mitigated risk, results are also important, particularly when Canadian equities have generally lagged U.S. equities for nearly a decade. 

“Superior, long-term results are achievable in Canada,” says Burge, “but you have to find the companies able to deliver them and construct a portfolio with the right mix.” 

Jeremy Burge is an equity portfolio manager with 42 years of investment experience (as of 12/31/2023). He is also chair of Capital International Asset Management (Canada), Inc., part of Capital Group. He holds a bachelor’s degree with honours in economics from the University of Nottingham.

Kathrin Forrest is an equity investment specialist at Capital Group. She has 19 years of industry experience and has been with Capital Group for one year (as of 12/31/23). She holds a master's degree in economics from Wayne State University and holds the Chartered Financial Analyst® designation.


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