Paul Musson, the lead manager of the $3.4-billion Mackenzie Ivy Foreign Equity, has difficulty finding investment opportunities these days.

“Ivy Foreign has a sizeable cash weight. It’s over 20%,” says Musson, “just because we’re having a hard time finding quality at a reasonable price. We think very long term and we’re fanatical about quality.”

When Musson looks at the global macroeconomic fundamentals, he’s unimpressed with the world’s balance sheet. There’s too much debt outstanding, he says, so he has factored slower economic growth into his earnings forecasts.

Following a patient, bottom-up, value-based discipline, Musson’s objective is to “carefully grow” clients’ capital through all market cycles. “We know that a bear market can happen at any time,” he says, “and we don’t want to be caught off guard.”

Musson, a senior vice-president, investments, at Mackenzie Investments, has led the Toronto-based Ivy team since January 2009. His responsibilities also include oversight of Mackenzie Ivy Canadian and Mackenzie Ivy European Class.

The team is responsible for just over $8 billion in total assets under management. Musson was the winner of the Morningstar Foreign Equity Fund Manager of the Year award at the Morningstar Canadian Investment Awards gala in 2011.

Musson, 52, received a business commerce degree, majoring in finance, from Montreal’s Concordia University in 1988. Finding employment opportunities challenging in the Montreal area, he moved to Toronto in December 1990 and took on two jobs. One was a short-term contract with an insurance company and the other was working at night at a video store.

In 1992, Musson joined the then named Wood Gundy Inc. as an assistant broker. He moved to the international sales desk at the firm in 1994. He received the CFA designation in 1995 and became head of the international equities group about three years later. He then left the brokerage firm to join fund manager AIC Ltd., where he worked as a senior investment analyst from 1998 to 1999 before joining Mackenzie.

The Ivy team, in addition to Musson, consists of six members (portfolio managers and analysts). Currently, the firm is seeking another member to assist with the Ivy Canadian team.

Musson’s foreign-equity mandate starts out with a universe of approximately 1,700 stocks. The screening process ranks these companies according to quality standards and strength. All of the stocks chosen for Mackenzie Ivy Foreign Equity have an A+, A or A- rating, according to the Ivy team’s criteria.

On the domestic side, the Musson-led team may invest in B-ranked companies because the opportunity set in Canada is smaller. The potential universe for Mackenzie Ivy Canadian, for instance, consists of only about 100 stocks. Musson says the slight compromise on quality is offset by demanding better valuations. So the stock has to be considered cheap, but not necessarily deeply discounted.

For both the foreign and domestic mandates, Musson and his team take a concentrated approach to building their stock portfolios. They hold about 30 mid-to-large-capitalization companies.

Though the investment process starts with quantitative screening, Musson says 90% of the team’s time is spent on qualitative research. They focus on companies that they’re confident will still be great businesses 10 years from now because of their corporate culture.

“So you think about maybe a Nestlé,” says Musson, citing one of his holdings. “I’m pretty sure Nestlé is going to be a pretty dominant company five and 10 years from today.”

Among the fund’s top holdings, Hyundai Motor Co. Ltd. meets the fundamental criteria and the company’s objectives are considered closely aligned with the Ivy team. “They know that recessions are not a thing of the past,” says Musson, “and they don’t build too much capacity based on the rosiest estimates of car sales in any given year.”

Quantitatively, Hyundai has a very strong balance sheet, good returns and good free cash flow. Musson refers to the Korean auto-maker as “a high-quality company, with a share price trading at a low-quality perception, so it was an opportunity for us to take a stake.”

Hyundai is one of only two Far East names, totalling 6% of the overall portfolio of Mackenzie Ivy Foreign Equity. Nearly all of the fund is invested in in U.S. and Europe companies.

The scarcity of Asian names isn’t for lack of research. Last year, the team added an associate portfolio manager specializing in the Far East. “A lot of the high-quality names that we’re finding still look expensive to us,” says Musson.