Economic growth remained average and steady in the United States over the third quarter, supported by spending by households and for infrastructure building. It reaccelerated in Canada after a poor first half of 2026. The labour market stayed balanced.
The war in Iran and the fight over the Strait of Hormuz lingered on, pushing up energy prices, with inflation following suit. This situation, combined with concerns over American budgetary deficits and trade uncertainties, has led to large increases in interest rates of all maturities.
Central bankers took notice and some, notably those of the United States, Europe, and Japan, reversed their accommodating stance and lifted their benchmark rates. The Bank of Canada stayed put.
European economies suffer from the higher energy prices and inflation, and governments are using fiscal stimulus to offset the effects. In China, the technology sector is booming, partially offsetting poor consumer and infrastructure spending.
The Canadian yield curve increased and the FTSE Canada Universe Bond Index declined (-3.0%). The S&P/TSX Preferred Share Index (0.0%) remained flat.
In the equity markets, the S&P/TSX Composite Index (1.6%), S&P 500 Index (2.3%), and MSCI EAFE Index (0.9%), posted modest returns.
The Information Technology and Materials sectors performed strongly in Canada, with the latter benefiting from surging gold prices. Meanwhile, the Energy sector emerged as a strong outperformer across both US and international indices, alongside US Information Technology and international Financials and Communication Services. Conversely, rate-sensitive sectors like Utilities and Real Estate lagged broadly across all regions as interest rates surged.
The Triasima Balanced Income Fund had a -3.6% return this quarter, versus 0.2% for its benchmark this quarter.
The Asset class allocation was positive during the period, driven by a large underweight in bonds, but this was more than offset by negative security selection.
The mandate’s tilt toward the dividend style factor suffered negative returns amid surging yields, explaining part of the underperformance. A pullback in select AI-exposed holdings, notably Japanese companies Daifuku and Murata, also detracted from relative performance. Conversely, several Canadian holdings were positive contributors, benefiting from high oil prices or the Canadian nation-building theme.
The Fund’s asset class structure maintained a bond underweight, averaging 21.8% versus 30.0% for the benchmark. The overweight in international equities was eliminated, and Health Care sector exposure was increased.
The relative bonds duration (6.9 years vs 6.7 years for the benchmark) has not changed. The Fund's current income yield is 3.0%.
On the quantitative side, the Fund equities have superior risk and volatility, valuation, expectations and revenue growth metrics relative to the equity benchmark.
Interest rates increased in recent months, and their trend is now upward. The three equity benchmarks set new highs during the quarter, but their uptrends weakened thereafter.
The fundamental outlook for Canadian bonds has weakened due to rising interest rates, but not by much since we now have a higher yield curve. For equities, the fundamental outlook has also deteriorated due to the higher rates and inflation. However, resilient economic growth and growing profits compensate somewhat.
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.
The benchmark for the Triasima Balanced Income Fund is composed of the following indexes: 5% FTSE Canada 91 Day T-Bill, 30% FTSE Canada Universe Bond, 5% S&P/TSX Preferred, 35% S&P/TSX Composite, 15% S&P 500 Net (CAD) AND 10% MSCI EAFE Net (CAD).
Data on the FTSE Canada 91 Day T-Bill, FTSE Canada Short Term Bond and FTSE Canada Universal Bond reference indices are provided by FTSE Global Debt Capital Markets Inc. (“FTSE”). Data on the S&P/TSX Income Trust, S&P/TSX Preferred Share, S&P/TSX SmallCap, and S&P/TSX Composite reference indices are provided by TSX Inc. (“TSX”). Data on the S&P 500® Index are provided by Standard & Poor’s Financial Services LLC (“S&P”). Data on the MSCI EAFE, All Country World, and World reference indices are provided by Morgan Stanley Capital International Inc. (“MSCI”). Lastly, the classification of securities according to the Global Industry Classification Standards (“GICS”) is provided jointly by MSCI and S&P. (FTSE, TSX, S&P, and MSCI are hereafter collectively referred to as “indices and data providers”.)
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