The Canadian Free Cash portfolio offers sweet returns
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The Canadian Free Cash portfolio has generated an average annual return of 14.9% from 1999 to February 2024, compared to the S&P/TSX Composite Index's average annual return of 6.7% over the same period. The portfolio selects 10 stocks with the lowest ratios of enterprise value to free cash flow (EV/FCF) from the largest 300 Canadian stocks by market capitalization. There are also 20- and 30-stock variants of the portfolio. The larger portfolios had slightly lower returns but provided a smoother ride with less volatility. During the financial crisis of 2008-09, the portfolios experienced significant declines, with the 10-, 20-, and 30-stock portfolios falling 58%, 56%, and 49%, respectively. Overall, the Canadian Free Cash portfolio has had sugary highs and nauseating crashes, but may perform well over the long term.
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