In our latest Speaker Series, portfolio managers David Atkins and Darrin Erickson joined us for a candid conversation about how they’re managing the Income Pool in today’s uncertain environment. The discussion covered everything from asset allocation and company selection to inflation defense and global opportunity.
Managing Risk Without Sacrificing Return
One of the most consistent themes throughout the session was the importance of managing risk — not just market risk, but business and valuation risk as well. Both managers emphasized that the pool is built to hold up during turbulent times, and recent performance has validated that approach. Whether it was the Trump-era tariff shocks or broader market volatility, the pool consistently declined less than its benchmark and recovered faster.
This resilience is no accident. The managers focus on businesses that are difficult to compete with, replicate, or live without — companies like utilities, insurers, and banks. These are the kinds of holdings that offer stability, cash flow, and long-term growth potential.
A Dynamic Approach to Asset Allocation
While the pool is currently positioned with a neutral balance between equities and fixed income, that mix is actively managed. David and Darrin work closely with Canso to shift capital based on opportunity. If equity markets present compelling value, they’ll reallocate from bonds or deploy available cash. If opportunities dry up, they’re not afraid to return capital to the bond side.
This flexibility was on full display during the 2023 market dip, when the team moved capital from fixed income into equities to take advantage of lower valuations. It’s a proactive, not reactive, approach — one that’s grounded in data and discipline rather than emotion.
Balancing Income and Growth
A question from the audience asked how the managers balance the need for income with the desire for growth. David explained that while yield is a priority — with a target of 3% or higher — it’s never pursued at the expense of quality. “If you just reach higher for yield,” he said, “you’re probably exposing yourself to either no growth or downside risks.”
Darren added that sustainable earnings growth is what ultimately supports future dividends. The goal is to find companies that can deliver both — attractive current income and long-term compounding.
Global Exposure: Why It Matters More Than Ever
Darrin made a compelling case for international diversification. With roughly 80% of publicly traded companies residing outside North America, and many trading at a discount to U.S. valuations, the global opportunity is too large to ignore.
He pointed to historical cycles where international markets outperformed the U.S. by an average of 8% annually over four-year periods. Today, he believes we’re entering another such cycle — and the pool is positioned to benefit.
Company Spotlights and Portfolio Moves
David shared insights from a recent site visit to Pepsi, highlighting its diversified business model (58% snacks, 42% beverages) and global growth potential. Compared to Coke, Pepsi offers similar profitability and dividends but trades at a significantly lower valuation — making it a compelling opportunity.
Other recent moves included:
Added: Campbell’s, General Mills, Manulife.
Sold: Cisco (due to slowing growth), TD Bank (due to regulatory headwinds in the U.S.).
Darrin, meanwhile, trimmed positions in Siemens and Deutsche Telekom after strong performance, and added to Tokyo Marine and United HealthCare during short-term dips. He also highlighted Wolters Kluwer, a Netherlands-based consulting firm with a 100+ year history of steady compounding.
Closing Thoughts: Confidence Through Clarity
As markets continue to shift and headlines stir uncertainty, the Income Pool remains grounded in a clear philosophy: invest in durable businesses, manage risk proactively, and stay transparent with investors. This speaker series didn’t just offer a glimpse into portfolio decisions — it reaffirmed the discipline and conviction behind them.
Whether trimming positions after strong performance or reallocating during market dips, the managers are focused on long-term outcomes, not short-term noise. And as global opportunities expand and inflation concerns linger, their steady approach offers something increasingly rare: confidence through clarity.
We’re grateful to David Atkins and Darrin Erickson for sharing their insights — and to our audience for engaging in the discussion. We look forward to continuing the conversation in future speaker series.