WINNIPEG (GlobeinvestorGOLD – Hugh McCauley has turned in a double digit return in a market where just breaking even is noteworthy.

His Acuity All Cap 30 Canadian Equity Fund generated a 13.6-per-cent return for the 12 months ended Dec. 31, 2007, far ahead of the 5.3-per-cent return of peer Canadian focused small to mid cap equity funds in the period. For five years ended Dec. 31, the fund produced an average annual compound return of 26.2 per cent, more than double peers’ 13-per-cent average annual compound return. Mr. McCauley, a managing director and lead portfolio manager for all funds at Acuity Funds Ltd. in Toronto, has headed the $373.8-million portfolio since inception in September, 2000, with analysts Warren Fenton and Martin Grosskopf.

“We look for proprietary advantages in technology, process, distribution or ownership of assets. Moreover, we want growing free cash flow,” Mr. McCauley said. “In commodity stocks, we want to be up even if the commodity price is flat. The concentration in fewer than three dozen names allows us to follow each closely. For the next three to six months, markets will be very volatile, but investors need to take a longer view. We see this choppiness as presenting buying opportunities.”

Enablence Technologies Inc. is an Ottawa-based manufacturer of components for optical information networks. Stock initially purchased at 35 cents per share has recently traded at $2.30. Enablence has a unique technology that allows it to make optical wave guides for less than $15 each compared to competitors’ costs of $72 per unit, Mr. McCauley said. Enablence charges $60 to $65 per unit and can sell as many as it can build, he explained.. Earnings should rise to 50 cents per share in calendar 2009 as the company moves from research into production. With 12 to18 months, shares should hit $20, he suggested.