Morningstar - Q4 2021 - 96

Ten Questions
North Growth's Erica Lau sees the
opportunities in decarbonization.
Ruth Saldanha, editorial manager for Morningstar
Canada, interviewed Lau in August.
1. Where are you finding the best opportunities?
Based on our growth-at-a-reasonableprice
investment philosophy, we are finding good
opportunities in specialty retailers and in
emerging technologies.
2. With the reliance that we have on energy in
Canada, how do you balance environmental, social, and
governance concerns with investing in the region?
The North Growth Canadian Equity Fund has
not had any direct exposure to oil and gas for over
a decade, and this has not sacrificed returns.
In fact, the fund's exposure to the three largest
sectors of the S&P/TSX Composite (energy,
financials, and materials) is less than 5%. The
fund has a drastically different profile than
the index and offers an attractive diversification
opportunity, in contrast with the mainstream
Canadian equity fund, which is typically heavily
invested in resources and financials.
Erica Lau is CEO and lead portfolio manager at
Vancouver-based North Growth Management.
She's been with the firm since it opened
in 1998 and is currently the lead manager of
4-star North Growth US Equity and 5-star North
Growth Canadian Equity. Both funds score
well on Morningstar's Sustainability Rating,
with 5 and 4 globes, respectively. Lau earned
a bachelor's degree of commerce from
the University of British Columbia in 1997. After
college, she worked at Phillips, Hager,
& North and followed that firm's cofounder,
Rudy North, when he launched North Growth
Management the following year.
Photography by Kyle Cong.
3. What are the main ESG risks you're watching?
Where are the ESG opportunities?
As the world continues to transition toward
decarbonization to mitigate the risks of climate
change, we are closely monitoring the
process. We believe clean and renewable energy
investments will enhance long-term returns
as non-carbon-based energy sources capture an
increasing share of global energy demand
growth going forward. Broadly, there are
ESG opportunities with all companies as society
collectively needs to promote sustainable
economic growth, social equality, and improved
corporate governance.
4. What are the top three things you look for when
you pick stocks?
We look for solid business fundamentals,
meaning companies with strong financial metrics,
96
Morningstar Q4 2021
competitive advantages, and long-term
growth prospects; quality management with
a track record of delivering earnings
growth and strategic planning; and reasonable
valuation, according to traditional metrics,
notably price/earnings ratios.
5. Where would you be working now if not
in financial services?
I excelled as a student in high school and
university, so I think I could have pursued a career
in academia.
6. What's the best investment advice you've received?
Stay disciplined and focus on the long term.
While the short term is unpredictable, over the
long run, equities have been the best asset
class available for maximum total return or growth
of capital.
7. What are you recommending to friends these days?
To take care of themselves and their families (e.g.,
get vaccinated) during this ongoing pandemic.
8. What do you enjoy doing when you aren't investing?
I am an avid reader of fiction. Diving into a
good novel is one of the best moments of my day.
I also love traveling with my husband and our
two daughters.
9. What are you reading?
Malibu Rising, by Taylor Jenkins Reid. My teenage
daughter recommended the author after
enjoying one of her earlier books, The Seven
Husbands of Evelyn Hugo.
10. Do you have a favorite charity you wish more people
knew about?
The KidSafe Project Society. KidSafe provides
programming and food security for some
of Vancouver's most resilient kids, both after
school and during break times.
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