Triasima Canadian Small Capitalization Equity Fund Commentary – Q3 2026

The economy

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 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 small capitalization equity market

The S&P/TSX SmallCap Index had a 2.4% return this quarter. 

The market had a two-speed tone. The highly cyclical Energy (8%) and Materials (8%) sectors outperformed the overall market by a solid margin. Energy producers continued to climb on the back of elevated oil prices, while precious metals miners rallied sharply after the announcement of bond buybacks by the American Treasury Department. 

The laggards were the rate-sensitive sectors. The Information Technology (-14%), Communication Services (-9%), Utilities (-9%), and Real Estate (-7%) sectors all fell as interest rates surged.

The Fund

The Triasima Canadian Small Capitalization Equity Fund had a -2.5% return this quarter. 

Security selection accounted for most of the underperformance, especially from the Energy and Industrials sectors; where several securities with industrial operations sharply reversed their trend due to the trade tensions with the United States. Sector allocation also detracted relative performance due to underweights in the Energy and Materials sectors.  

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

*Securities not held in the fund.

Positions in some poorly rated companies were reduced; mostly from the Materials sector and leading it to a large underweight. New positions include Air Canada and Badger Infrastructure Solutions in the Industrials sector, and EQB and Propel Holdings) in Financials. The Industrials sector kept its large overweight. 

The Three-Pillar Approach ™

Quantitative parameters are strong. Profitability, Expectations, Risk and Volatility, and Revenue Growth metrics compare favourably with the benchmark.

The Canadian small capitalization equity market has been engaged in a sideways Trend since the end of February 2026, when the Iran war began. This quarter, the value style dominated, with the Profitability and Valuation style factors outperforming.  

The fundamental outlook deteriorated during the quarter due to the general rise in interest rates, and higher oil prices and inflation. Resilient economic growth and growing profits are partial offsets. 

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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