Middlefield Canadian Income (MCT) offers exposure to the high dividend and growth potential in Canadian equities. Canada is a net energy exporter and its market has a high weighting to energy stocks, as well as to companies producing some key hard and soft commodities that are currently in high demand. The market is heavily weighted to financials, which benefit from a rising interest rate environment, and MCT has a structural overweight to REITs, which offer decent inflation protection. As a result, the market and MCT’s portfolio have significant value tilts which complement the growth-heavy S&P 500 while also offering economic exposure to the US through the importance of the US’s revenues for Canadian companies. MCT’s manager Dean Orrico points out that Canada also has some belated reopening beta to offer thanks to being behind the US and UK as regards its vaccination programme and lifting of restrictions, adding to the sense that Canada is in a sweet spot.
