Triasima ACWE Fund commentary – Q2 2023


The economy

The gradual economic deceleration, mainly caused by the elevated interest rates, is persisting. Yet the strong labour market, with low unemployment levels and growing household income, has emerged as a crucial counterbalance. Consumer confidence remains buoyant, which supports robust consumer spending, further bolstered by record-high levels of consumer credit. Additionally, expansionary fiscal policies in the United States support the job market.

The services industries are currently playing a pivotal role in sustaining the global economy while the manufacturing sector faces challenges due to the slowdown. With the pandemic rebound still in play, and robust income, households are increasing their spending on services, particularly in areas such as tourism and leisure.  

Inflation remains on a downward trajectory but still exceeds most countries’ target. Continuing their war on inflation, central banks in developed countries, such as in Canada and the United States, are raising their benchmark short-term rates, but at a slower pace. 

China stands out as an exception amidst the global trend of monetary tightening due to significant economic challenges, including elevated youth unemployment, lackluster export markets, and substantial financial leverage in its property sector.

The world equity market

The MSCI ACWI had a 3.9% return this quarter.

The world equity market was driven by American mega capitalization securities: Amazon, Nvidia, Google, Meta Platforms, Tesla, and Microsoft. The Information Technology (12%), Communication Services (5%), and Consumer Discretionary (6%) sectors, where these stocks are classified, benefited from the excitement surrounding the potential applications of artificial intelligence. 

The Materials, Utilities, and Real Estate sectors lagged, pulling back 3% on average. All three sectors were negatively impacted by the rise in real interest rates and by specific considerations. 

The Fund

The Triasima ACWE Fund had a 4.4% return this quarter.

Sector allocation and securities selection both contributed to the added value. The former’s added value is spread out over several sectors. As for security selection, it was strong in the Information Technology and Health Care sectors, while it detracted value in Consumer Discretionary.

The following table presents the top and bottom contributors to relative return:

  Positive impact

  Negative impact

Super Micro Computer

Ulta Beauty

Kinsale Capital

Apple *

Eli Lilly

Yakult Honsha


Gr. Aeroportuario del Sureste

Badger Meter

Marathon Petroleum

*Securities not held in the fund.

The weighting of the defensive Health Care sector was again reduced this quarter. Some Industrials holdings were sold but the Fund is still substantially overweight in this sector, as well as in Consumer Discretionary. Additions were made to the Information Technology sector and its large underweight was eliminated. Communication Services are underweight, largely because the Fund does not own Alphabet and Meta Platforms.

The Three-Pillar Approach ™

On the quantitative side, the Fund has superior risk, expectations, and revenue growth parameters than the benchmark. 

The MSCI ACWI index trend improved this quarter and was nearly upgraded to uptrend status. The factors Size, Dividends, and Value outperformed while Earning Variability underperformed. 

The fundamental background to worldwide equities has been stable recently. The slow-motion economic slowdown is carrying on but profitability expectations for 2023 and 2024, heretofore falling, have largely stabilized, helped by steadier long-term interest rates and falling inflation. The equity return outlook appears average for the remainder of 2023.

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