Triasima Canadian All Capitalization Equity Fund Commentary – Q4 2025

The economy

Growth remains robust in the United States. It is supported by the consumer spending of higher income households and an infrastructure construction boom, led by artificial intelligence related investments. Productivity gains are elevated and have led to low employment growth and a weak labour market. Concerns about tariffs have decreased, due to both their on-off nature and the ability of economic participants to adapt.

Canada’s GDP is buffeted by volatile trade numbers with the United States and is seesawing between good and bad quarterly releases. Overall, growth has been below average and employment statistics poor. 

Low enough inflation and weak labour markets led both the Bank of Canada and the Federal Reserve to lower their overnight rate during the quarter.

Manufacturing industries are holding up well in China, but growth is weighed down by the protracted property sector downturn and fragile consumer confidence. Inflation is very low and deflationary pressures persist. Japan, by contrast, has seen sustained enough inflation (four years above the 2% target) and raised, in an historic policy shift, its short-term policy rate to 0.75%, its highest rate in 30 years. Europe remains in a morose mood due to its contracting industrial base and geopolitical uncertainties.  

The Canadian equity market

The S&P/TSX Composite Index had a 6.3% return this quarter and 31.7% for 2025. 

The quarterly gain had a value orientation and was led by the cyclical Consumer Discretionary (11%) and Financials (10%) sectors, as well as, again, the Materials (12%) sector’s base and precious metals producers.

The lagging sectors were Industrials (-1%), with the Construction and Engineering stocks hit hard, Real Estate (-6%) due to growth concerns, and Communication Services (-2%) where Telus fell dramatically due to poor profitability.

The Fund

The Triasima Canadian All Capitalization Equity Fund had an 8.9% return this quarter and 38.1% for 2025.

Security selection in the Materials, Consumer Discretionary, and Information Technology sectors added value last quarter. This was partially offset by security selection in the Industrials sector, where a lingering bet on engineering and infrastructure companies has fallen out of favour. Sector allocation was neutral overall.

Main security contributors to relative performance :

*Securities not held or underweighted in the Fund.

The poorly performing Industrials sector was further reduced this quarter. Four names were eliminated while Canadian National Railway and Finning International, long absent from the Fund, are noteworthy introductions. The Consumer Discretionary sector has grown to a large overweight while the Fund keeps maintaining an important position, 19% at year-end, in precious and base metals producers.

The Three-Pillar Approach™

On the quantitative side, the Fund has worse volatility and risk metrics. This is offset by superior profitability and expectations parameters, and faster revenue and earnings growth.  

Despite a pause in October, the Canadian equity market remained in a strong uptrend in the fourth quarter and repeatedly set new highs. Its climb was fueled by corporate earnings growth.

The fundamental background to Canadian equities improved further in the quarter, fully offsetting the deterioration of the first half of 2025. Like the third quarter, profits kept on growing and long-term interest rates were stable. 

Legal notices

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.

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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