The economic situation has been stable in recent months. The United States is growing nicely, at approximately its long-term average of 2.5%, while the Canadian, Eurozone, and Japanese economies continue to lag, hovering around zero growth. With a recently introduced set of stimulus measures, China’s attempt to reaccelerate has had limited success so far.
The 2021 inflation surge has been brought back under control to 2% approximately, except for the United States where it is sticking near 3%. The inverted yield curves of the last few years are normalizing as central banks reduce overnight rates. Interest rates in the United States are above those of other advanced countries, due to its more buoyant economy.
The North American corporate world is managing well for the most part. Demand is sustained and costs are under control, leading to rising revenues and earnings. The labour market equilibrium, especially, is gradually tilting in favour of employers.
Almost half the world population went to the polls in 2024. In the United States, Donald Trump will be returning to the presidency in January 2025, having won the latest election with his economic and immigration platform. The unpredictable and unconventional nature of his policies and rhetoric are adding complexity to the economic outlook.
The MSCI ACWI Index had a 5.3% return this quarter and 27.8% for the year.
A key theme was the continued dominance of a handful of mega-cap companies, driven by excitement over the potential applications of artificial intelligence. Consequently, the Information Technology (+11%), Communication Services (+11%), and Consumer Discretionary (+12%) sectors, home to these large companies, outperformed
The rise in interest rates was detrimental to the interest sensitive sectors like Utilities (-3%) and Real Estate (-6%).
The Triasima ACWE Fund had a 4.0% return for the quarter and 31.3% for the year.
Sector allocation detracted value due to the Industrials sector being overweight and Information Technology underweight. Security selection also detracted value. It was strong in Industrials but negative for most other sectors.
The following table presents the top and bottom contributors to relative return:
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*Securities not held in the Fund.
The overweight of the Health Care sector was eliminated, and the proceeds were deployed in the Information Technology sector that nonetheless still stands underweight relative to the benchmark. The Industrials sector’s overweight remained large.
On the quantitative side, the Fund has higher revenue and profits growth than the benchmark. Valuation and risk parameters indicate the Fund is more expensive and volatile.
The MSCI ACWI Index has been in an uptrend throughout 2024, repeatedly setting new all-time highs. This Trend looks set to continue, but at a slower pace. The performance of the style factors was mixed this quarter for the Index, but somewhat disadvantageous overall given Triasima’s investment methodology.
The fundamental background to worldwide equities has been unchanged in recent months. The strong American economy, and lower inflation and short-term interest rates are positive factors, somewhat offset by generally poor growth in China, Europe, and Japan.
The posted rate of return is a historical total rate of return compounded annually, except for periods of less than one year, which are not annualized. The rate of return shown takes into account fluctuations in unitholder value and the reinvestment of distributions. The posted rate of return does not take into account investment management fees and income taxes payable by the unitholder, which would have the effect of reducing the return. The Funds are not guaranteed, their value fluctuates, and past performance is not indicative of future results.
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