Triasima ACWE Fund commentary – Q3 2023


The economy

Interest rates started rising over one and a half years ago and the effects of a higher cost of money have since permeated all aspects of the economy. A slow-motion slowdown is ongoing, with the consumer facing multiple pressures due to higher inflation and higher borrowing costs. 

Goods-producing industries have already weakened, and service-related spending is now expected to follow suit after surging in recent years. The strong labor market has supported confidence and spending until now, but it is beginning to lose steam. Meanwhile, expansionary fiscal policies continue to prop up economic activity.

Central banks in advanced countries are nearing the end of their tightening cycle since inflation is now on a general downward trajectory. 

The heavily indebted Chinese economy is slowing down. The reverberations are felt globally, particularly impacting export-driven countries such as Germany.

The world equity market

The MSCI ACWI had a -1.4% return this quarter. It’s the first negative quarterly return for this index in 2023.

Utilities (-7%) and Real Estate (-5%) sectors saw significant declines, primarily in response to rising bond yields. This rise is attributed to a stronger-than-expected economy and the Federal Reserve's commitment to a "higher for longer" interest rate stance.

The Energy (13%) sector registered a notable gain, as oil prices increased by 29% thanks to effective supply management by OPEC countries. The Communication Services (5%) sector was primarily driven by the mega cap securities Alphabet and Meta Platforms. Thirdly, the Financial (1%) sector was supported by the Insurance subsector, whose investment income is helped by higher interest rates. 

The Fund

The Triasima ACWE Fund yielded a -0.9% return for the quarter.

Securities selection added value this quarter, primarily driven by the Financial and Health Care sectors, but was partially offset by selection in the Materials sector. The only significant detractor in sector allocation was the underweight position in the Energy sector.

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

  Positive impact

  Negative impact

Novo Nordisk A/S ADR

Harmonic Inc.

Apple Inc.

Sigma Lithium Corporation

Sumitomo Mitsui Fin. Group Inc.


Kinsale Capital Group Inc.

Hermes International

Marathon Petroleum Corp

Iridium Communications Inc.

*Securities not held in the fund.

The large overweight positions in the cyclical Industrials and Consumer Discretionary sectors were eliminated. The Communication Services sector remains underweight. Additionally, the exposure to the Financials sector was increased, and the cash and short-term reserves grew during the quarter.

The Three-Pillar Approach ™

On the quantitative side, the Fund has superior volatility and expectations parameters relative to the benchmark. Revenue growth is lower and valuation metrics indicate the Fund is more expensive. 

After a strong first half, the MSCI ACWI reversed course this quarter. Overall, the trend is in a recovery mode following the 2022 bear market, and the path of least resistance is upward. Factors associated with quality outperformed this quarter.

The fundamental background to worldwide equities has been stable in North America but kept deteriorating abroad. Interest rates rose and the gradual economic slowdown carries on, but this is largely offset by falling inflation and the slower pace of the profitability expectations decline. The equity return outlook appears average for the remainder of 2023 but improves for 2024.