Sprott Canadian Equity Fund
Investment Team
Eric Sprott
Chief Executive Officer; Senior Portfolio ManagerEric Sprott
Chief Executive Officer; Senior Portfolio Manager
Eric Sprott has more than 40 years of experience in the investment industry. After earning his designation as a chartered accountant, Eric entered the investment industry as a research analyst at Merrill Lynch. In 1981, he founded Sprott Securities (now called Cormark Securities Inc.), which today is one of Canada’s largest independently owned securities firms. In 2001, Eric established Sprott Asset Management Inc.
Eric’s investment expertise is well represented in his track record in managing the Sprott Hedge Fund L.P., Sprott Hedge Fund L.P. II, Sprott Bull/Bear RSP Fund, Sprott Offshore Funds, Sprott Canadian Equity Fund, Sprott Silver Equities Class and Sprott Managed Accounts. His extensive list of accolades include: Canadian Investment Awards’ Opportunistic Strategy Hedge Fund Award (Sprott Hedge Fund L.P., 2004); MarHedge’s Best Canada Based Annual Performance Award (Sprott Offshore Fund Ltd., 2006); HFM Week’s Best Long/Short Hedge Fund Globally (Sprott Offshore Fund Ltd., 2008); Winner of Absolute Return’s Hedge Fund of the Year (Sprott Capital LP, 2010). Over the years, Eric has personally been the recipient of numerous awards and honours, including one of Investor Digest’s Canada’s Best Investors (2004); Ernst & Young’s Entrepreneur of the Year (2006); Investment Executive’s Fund Manager of the Year (2007); Advisor.ca’s Top Financial Visionary (2011); Terrapinn's Most Influential Hedge Fund Manager (2012); and the 2012 Murray Pezim Award for Perseverance and Success in Financing Mineral Exploration (2013).
More recently, Eric has been elected Fellow of the Institute of Chartered Accountants of Ontario (FCA), a designation reserved for those who demonstrate outstanding career achievements and service to the community and profession.
Over the years, Eric has also been recognized for his considerable philanthropic endeavours and community contributions. Eric and his family established the Sprott Foundation in 1988 to address urgent human need, hunger and homelessness. He has provided generous endowments to Carleton University, the Ottawa Hospital Foundation, Daily Bread Food Bank and United Way, among others. More recently, Eric donated $1.4 million to CanFund in support of Canadian athletes for every gold medal won at the 2010 Vancouver Olympics. In April 2011, along with Sprott Inc., Eric sponsored a 24-year old Canadian driver James Hinchcliffe, getting him a seat with the prestigious Newman/Haas Racing. In June 2012, the Sprott Foundation donated $25 million in support of the Department of Surgery at the University Health Network.
Allan Jacobs
Senior Portfolio Manager, Director of Small Cap InvestmentsAllan Jacobs
Senior Portfolio Manager, Director of Small Cap Investments
Allan Jacobs joined Sprott Asset Management LP in August 2007 as Director of Small Cap Investments, with a focus on the Sprott Small Cap Funds.
Prior to joining Sprott, Allan was Lead Portfolio Manager of Canadian Small Cap Equities and a Managing Director at Sceptre Investment Counsel. There, he managed the Sceptre Equity Growth Fund, the Sceptre Canadian Equity Small Cap Pooled Fund and the Canadian Small Cap component of institutional portfolios. He also managed the Sceptre Small Cap Opportunities Fund, which was launched in January 2007 – now called the Sprott Small Cap Hedge Fund.
Allan was acknowledged for his achievements at Sceptre on several occasions: the Sceptre Equity Growth Fund was awarded the Best Canadian Small Cap Fund over one, three, five and ten year periods at the 2007 Canadian Lipper Fund Awards. The Fund was also a finalist for the 2006 Small Capitalization Equity Fund of the Year and was chosen Canadian Equity Fund of the Year in 2005 at the Canadian Investment Awards. The Small Capitalization Canadian Equity Pooled Fund, also managed by Allan, was awarded Canadian Small Cap Pooled Fund of the Year in 2006. Furthermore, Allan was chosen the 2006 Fund Manager of the Year at the Canadian Investment Awards.
Prior to joining Sceptre, Allan managed the largest equity fund in South Africa (a $5 billion fund for Old Mutual), and thereafter, managed Small Cap Canadian Equities at Canada Life Investment Management Limited.
Peter Imhof
Investment StrategistPeter Imhof
Investment Strategist
Peter Imhof is an Investment Strategist with Sprott Asset Management LP. He joined the firm in August 2007, and together with Allan Jacobs, focuses primarily on the Sprott Small Cap Funds. Peter is also a member of the Sprott Canadian Equity Fund’s and Sprott Tactical Balanced Fund’s Investment Teams.
Peter is a frequent guest on the Business News Network (BNN) and the winner of the 2010, 2011 and 2012 Financial Post Stock Pickers’ Challenge.
Peter began his investment career at Sceptre Investment Counsel in March 1998. From 1998 to 2000, he was involved in the quantitative analysis and portfolio construction of Canadian Equities. Peter was a member of the award-winning management team of the Sceptre Equity Growth Fund and the Small Capitalization Canadian Equity Pooled Fund, and in 2006, was appointed Managing Director.
Fund Details
| Fund Status | Open |
| Distributions | Income and Capital Gains Distributed Annually (if any) Distributions are reinvested automatically |
| Fund Code |
SPR 001 - (A) |
| Inception Date | 9/26/1997 |
| Nature of Securities | Mutual Fund Trust Units |
| Type of Fund | Canadian Equity Fund |
| Valuations | Daily |
| Redemptions | Daily |
| Minimum Initial Investment | $1,000 CDN |
| Minimum Subsequent Investment | $100 CDN |
| Minimum Investment Term | 90 days (2% penalty) |
| Management Fee | 2.5% annual - (A) 1.5% annual - (F) |
| Performance Fee | 10% of excess over S&P/TSX Composite Total Return Index |
| Eligible for Registered Plans | Yes |
| Investor Risk Tolerance | High |
Fund Objective
The objective of the Fund is to outperform the broad Canadian equity market as measured by the S&P/TSX Composite Total Return Index, over the long term of 5+ years, providing long-term capital appreciation and value by investing primarily in small-to mid-capitalization stocks of Canadian issuers. To assist in achieving this objective, the Fund may focus its assets in specific industry sectors and asset classes based on the analysis of business cycles, industry sectors and market outlook.The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.
Q1 Market Commentary
The Sprott Canadian Equity Fund Series A (the “Fund”) declined 10.4% during the quarter as its precious metals focus weighed on its performance. The S&P/TSX Composite Total Return Index gained 3.3% over the same period.
The majority of the weakness occurred during February, when falling gold and silver bullion prices negatively impacted performance. During that month, market sentiment was positive regarding a global recovery, this optimism was solidified in the wake of the G20 summit. Consequently, investors became less defensive and lightened up their gold and silver bullion positions in anticipation of a US recovery pushing the US dollar higher. This, coupled with the temporary halt in Chinese demand as that country paused for days to celebrate their Lunar New Year, contributed to gold bullion’s 5.0% decline during February while silver bullion declined 9.3% in US dollar terms.
The shares of gold and silver miners experienced a more pronounced downwards movement during the quarter as investors expressed concerns over the sector’s ability to manage capital expenditures and cost overruns. Smaller-cap miners, a sector which the Fund has always focused on, were clearly out of favour during February as the Market Vectors Junior Gold Miners ETF declined 16.2% during the month in US dollar terms.
The first quarter was discouraging, as the Fund’s overall macro view and consequential asset allocation has not changed and our convictions have yet to be rewarded. The massive money printing programs have not resulted in the inflation that we consider to be inevitable, with history as testament. Most recently, our view on inflation has been supported by the actions out of Japan, where that country’s central bank has embarked on an enormous stimulus program which led to frenzied bond purchases. We also believe that all bank depositors should take note of the “bail in” that was forced upon uninsured depositors in Cyprus.
While companies that excel in a low interest rate environment, such as auto manufacturers and home builders, have done well, we maintain that core industrials continue to struggle. Recent statistics indicate that real disposable income is down over the past 5 years and negative earnings releases outnumber positive earnings by 3.5:1.* Within the precious metals sector, cheap has become cheaper and we remain convinced that our portfolio positioning will provide outsized longer-term returns over the broad market.
* Source: Sprott Asset Management LP.