Many of us take a pause at the beginning of a new year to reflect on past events and set objectives for the future. In keeping with this tradition, we thought we should note a few highlights for our firm in 2021 and share some exciting new developments for the coming year.


First, a look back

The second year of the pandemic brought us several new challenges and opportunities. We continued to work remotely and though we all hoped for a gradual return to the office, ensuring the health and safety of our employees remained our highest priority. In-person meetings were few and far between, so we expanded our use of digital tools to increase the frequency of communication. We supplemented our flagship quarterly “Economic and Capital Markets Outlook” publication with monthly strategy letters and occasional topical research notes. Our September Investor Forum featured Letko Brosseau portfolio managers in a series of webinars which proved to be so popular, that we will be making this an annual event.

You may have noticed Letko Brosseau frequently featured on the front pages of the business news throughout the past year. Given the broad base of investments we oversee, it is not unusual to find ourselves occasionally disagreeing with managements of our companies, particularly concerning proposals to sell their businesses. Three events occurred in 2021 that required us to speak out to defend your shareholder rights. We opposed takeover bids for Dorel Industries, Atrium European Real Estate and Cominar. We succeeded in the case of Dorel with the proxy vote overturning the proposed privatization at $16 per share. The subsequent sale of a subsidiary drove the share price well above $20 and will leave the company with significant amounts of cash and good prospects for the remaining businesses. We opposed the privatization of Atrium, an Eastern European commercial real estate business. Through our engagement with the company, we contributed to an increase in the offer price from €3.15 per share to €3.63 per share and will realize a profit on the sale of our holdings. With respect to Cominar, a Quebec-based REIT, we believed the timing of the deal was ill-conceived and the offer price significantly undervalued the real estate assets, as the company was still in the early stages of emerging from the pandemic. Unfortunately, our efforts in opposing the sale failed and we will, therefore, be forced to sell our holdings at $11.75 per share.

We have also taken a very vocal position with respect to a worrying trend towards less investment in Canadian public companies by domestic pension funds. Were you aware that in 2000, our country’s pension plans allocated around 28% of their total assets to Canadian publicly traded equities and by end-2020, this figure had dropped to around 4%? We believe this development is not healthy for Canada’s economic well-being and we are pleased to have found support for this view in several quarters, including from one of our leading chartered banks. Stay tuned to see how our “Invest in Canada” campaign develops.

In addition to advocating on governance issues on your behalf, our investment team also spends considerable effort to ensure that our portfolio companies behave with the highest standards with respect to environmental practices and social issues. Sustainable investing is seamlessly integrated into our research process, and our portfolio managers are leading the charge on environmental, social and governance (ESG) issues. By end-2021, over 80% of Letko Brosseau investment team members had obtained the Fundamentals of Sustainability Accounting (FSA)* credential from the Sustainability Accounting Standards Board (SASB), the industry leading accreditation for ESG investing.

Further new initiatives during the past year included the publication of our ESG Engagement Policy, a formal outline of how we structure and document our ESG activities, and our ESG Highlights report, a comprehensive look at our firm’s recent ESG initiatives. Of note, we developed an internal ESG engagement database to better monitor, document and track interaction with our portfolio companies, which we expect will contribute to improved outcomes. We also inked a licensing agreement with Sustainalytics to access carbon footprint data from more than 14,000 companies worldwide. In the future, we will be able to measure the carbon intensity of our portfolios and, importantly, analyze company objectives for improvement with respect to emissions and the path to net zero. We invite you to consult the Sustainable Investing section on our website to keep abreast of our engagement activity and our contribution toward positive change.

On the asset management front, we launched two specialty strategies during the year: the Letko Brosseau Infrastructure Equity Fund and the Letko Brosseau China Equity Fund. The former is designed to provide concentrated exposure to global publicly traded infrastructure companies with stable operating results, attractive growth profiles and high dividend yields. We believe it is an excellent vehicle for institutional clients who have been investing in this sector through private equity alternatives where fees tend to be high, and liquidity limited. Our China Equity Fund provides exposure to the world’s second-largest economy, home to many outstanding companies. Though we recognize the inherent political, regulatory and governance risks in investing in China, we believe that recent domestic market volatility has compressed prices to levels that are out of step with companies’ true value. All our strategies are offered at a very competitive fee schedule.

What lies in store for you in the year ahead

Should we continue to progress towards a full reopening, our investment team will be able to resume travelling around the globe to visit current and potential portfolio companies and we will plan for a return to the office. In any event, we have a busy agenda for the new year.

Amongst the many new initiatives we are working on, we would like to highlight two client-focused projects.

We are very pleased to announce that we will soon begin to rollout a secure digital platform enabling access to your accounts online. You will be able to consult your balances, view the details of your investments and monitor your portfolio’s evolution. Full details of when and how you will be able to use this secure portal will be available shortly.

And, to give you a behind the scenes look at our Climate Change Committee’s inner workings, we will publish a new series focusing on our Net Zero Emissions research. We intend to explore various topics, including the science behind climate change, the largest sources of emissions and the potential pathways to mitigating global warming. We hope that our deep dive into these important topics will help you understand how we arrive at the conclusions that directly inform our investment analysis and portfolio strategy.

Our predictions for 2022

Though we are all weary of pandemic-related restrictions and wish for a return to pre-COVID life, we must still acknowledge the encouraging progress made in 2021. Last year, the global economy recorded the strongest expansion in 50 years and is shaping up to deliver another year of above-trend growth. Despite the current turmoil arising from the emergence of Omicron, a new variant, we believe that the worst of the pandemic is well behind us. Over the coming months, we are of the view that the virus will transition from pandemic to endemic and become less dangerous over time.

Global equity markets enjoyed another strong year:  the total return (in Canadian dollars) for the S&P 500 Index was 27.6% in 2021, S&P/TSX was up 25.1% and the MSCI World Index rose 20.8%. Our strategies outperformed their respective benchmarks over the same period. Although we find these results satisfactory, we believe success is measured over a longer-term horizon. Since 1988, the first full year of data following the firm’s inception, we have generated a compounded annual return on total assets of 11.7% for investors. This is equivalent to C$34 billion in cumulative gains,** roughly comparable to the market value of Manulife, a leading Canadian insurance company. This performance was achieved through our disciplined fundamental, knowledge-based investment approach, which we exercise in all cycles, even during periods of market dislocation.

Looking ahead, we continue to see opportunities in equity investments, supported by normalizing economic activity, as COVID-19 and its variants subside. Notwithstanding early indications from the U.S. Federal Reserve and other central banks suggesting stimulus programs – helpful in stabilizing volatile conditions at the outset of the pandemic – will be withdrawn, economic momentum remains very positive.

The process of a normalization will bring a better balance to the global economy. Consumer demand will pivot to greater purchases of services, such as travel, leisure and meals away from home, all of which will contribute to a return to full employment. In the U.S., employment is close to pre-pandemic levels and year-over-year wage gains are robust, illustrating positive momentum. Other factors include the relatively high personal savings rate and record household net worth, supported by rising real-estate and stock market values. These conditions are not exclusive to the U.S. but are also radiating through many other countries.

The above forces argue for continued growth, which should support further equity gains. Your portfolios are populated with companies that represent a broad range of economic activity across many regions of the world. They have been chosen for their strong business franchises, top management, growth characteristics and sensible valuations. We are confident that your capital is positioned for meaningful value creation over the medium-term.

We thank you for entrusting us with the responsibility of investing on your behalf. All of us at Letko Brosseau wish you a healthy, happy and prosperous new year.

Daniel Brosseau


Peter Letko


David Després


Stéphane Lebrun


Rohit Khuller


Isabelle Godin


Legal notes

*Fundamentals of Sustainability Accounting (FSA) credential awarded by the Sustainability Accounting Standards Board (SASB) demonstrates in-depth knowledge of the integration of sustainability information into investment analysis. To qualify for the FSA Credential, one must complete two exams. Level I focuses on principles and practices and Level II focuses on application and analysis.

**Represents the total gain before fees on all assets for all mandates under management from January 1, 1988 to December 31, 2021.

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The information and opinions expressed herein are provided for informational purposes only, are subject to change and are not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Any companies mentioned herein are for illustrative purposes only and are not considered to be a recommendation to buy or sell. It should not be assumed that an investment in these companies was or would be profitable. Unless otherwise indicated, information included herein is presented as of the dates indicated. While the information presented herein is believed to be accurate at the time it is prepared, Letko, Brosseau & Associates Inc. cannot give any assurance that it is accurate, complete and current at all times. 

Where the information contained in this presentation has been obtained or derived from third-party sources, the information is from sources believed to be reliable, but the firm has not independently verified such information. No representation or warranty is provided in relation to the accuracy, correctness, completeness or reliability of such information. Any opinions or estimates contained herein constitute our judgment as of this date and are subject to change without notice.

Past performance is not a guarantee of future returns. All investments pose the risk of loss and there is no guarantee that any of the benefits expressed herein will be achieved or realized.

The information provided herein does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.

This presentation may contain certain forward-looking statements which reflect our current expectations or forecasts of future events concerning the economy, market changes and trends. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions regarding currencies, economic growth, current and expected conditions, and other factors that are believed to be appropriate in the circumstances which could cause actual events, results, performance or prospects to differ materially from those expressed in, or implied by, these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.