The economy

The second quarter of 2025 was characterized by abrupt and unpredictable shifts in American trade policy by the Trump administration. The April 2 tariff announcement deepened a sharp global equity sell-off. A subsequent pause in tariff escalation only added to volatility, leaving countries scrambling to revisit trade policies and businesses uncertain about pricing, sourcing, and compliance.

The American economy has proved resilient so far considering the trade turbulence and domestic cutbacks. Overall, capital goods orders, household revenues, the labor market, and inflation and interest rates have been stable. Some economic readings are now beginning to deteriorate, however, with the weak housing market possibly being the canary in the coal mine.

Weak industrial production persists, particularly in Germany where GDP growth was revised to zero. Easing inflation allowed the European Central Bank to reduce its overnight rate to 2% as growth concerns mounted.

The Canadian equity market

The S&P/TSX Composite Index had an 8.5% return this quarter, with all eleven sectors posting a positive return. 

The Information Technology (14%), Consumer Discretionary (14%) and Financials (12%) sectors led. Strong earnings growth and renewed enthusiasm around AI spending supported technology companies. A broader risk-on sentiment lifted the Consumer Discretionary sector while the Financials sector was driven by the easing trade tensions.

The Communication Services (3%) and Energy (1%) sectors lagged. The former is defensive and was simply out of favor. Energy names suffered from soft oil prices, due to rising global supply and lackluster demand.

The portfolio

The Triasima Canadian Equity Strategy had an 8.5% return this quarter.

Both sector allocation and security selection were neutral to relative performance, a rarity. Celestica was a standout name within the Information Technology sector, but its positive impact was offset by some weaker names in the Industrials and Financials sectors.

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

*Securities not held or underweighted in the portfolio.

Imperial Oil and Pembina Pipeline were sold from the poorly performing Energy sector and the Real Estate sector’s exposure was eliminated. Conversely, the Industrials and Financials sectors’ weights were increased given the risk-on environment. Exposure to the Communications Services sector was re-established with the purchase of Quebecor.

The Three-Pillar Approach™

On the quantitative side, the portfolio has higher revenue and profits growth than the benchmark, as well as better risk parameters. However, the Fund is more expensive.

Following a sideways first quarter of 2025, the Canadian equity market experienced a sharp, V-shaped pullback and rebound early this quarter. It next set multiple new all-time highs in May and June. Its trend is upward. The Volatility factors outperformed while Size and Dividend yield underperformed.

The fundamental background to Canadian equities is unchanged. It had worsened in the first quarter over the deteriorating economic relationship with the United States. Meanwhile, earnings for the S&P/TSX Composite Index are growing while interest rates remain 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 the representative portfolio’s market value and the reinvestment of income. The posted rate of return does not take into account investment management fees and income taxes payable by the account holder, which would have the effect of reducing the return. Investments 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”.) 

The indices and data providers have awarded limited licences to Triasima allowing it to use the above-mentioned indices and data in its portfolio statements. The information provided by the indices and data providers may not be redistributed, sold or used without the prior written consent of the indices providers concerned. The indices providers assume no liability with respect to the accuracy or completeness of these data or for any delay, interruption, or omission with regard thereto, and makes no warranty or declaration, either explicit or implicit, with regard to the results that might be obtained by using these data or as to the marketability or appropriateness of the data for a specific use