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 S&P/TSX SmallCap Index had a 10.2% return this quarter and 50.2% for 2025.
This gain was led by the Materials sector (23%), which benefited from record profit margins driven by a strong rally in precious metals prices. The cyclical Energy (10%) and Industrials (9%) sectors also performed well.
Conversely, the Information Technology sector (-11%) lagged, as AI adoption continues to weigh on sentiment for traditional software companies. Defensive sectors such as Utilities (-8%), Consumer Staples (-7%), and Real Estate (-5%) also underperformed.
The Triasima Canadian Small Capitalization Equity Fund had a 13.0% this quarter and 54.3% for 2025.
The outperformance was driven entirely by security selection, primarily within the Energy, Materials, and Information Technology sectors. This was partially offset by selection within the Financials sector. Sector allocation was neutral overall.
The table presents the top and bottom contributors to the relative performance:
|
Positive impact |
Negative impact |
|
ARIS Mining Corp |
MDA Space |
|
Kraken Robotics |
Zoomd Technologies |
|
Discovery Silver Corp |
Fireweed Metals |
|
DPM Metals Inc |
Vitalhub Corp |
|
Tamarack Valley Energy Ltd |
Propel Holdings |
*Securities not held in the fund.
Turnover focused on increasing the Fund’s growth profile through additions in various sectors while rotating out of holdings with declining Three-Pillar scores, primarily within the Energy and Information Technology sectors. An important focus was managing the very large, 35% at year-end, exposure to precious and base metals producers.
On the quantitative side, the Fund continues to exhibit superior revenue growth, profitability, expectations, and risk metrics compared to the benchmark. However, the Fund is more expensive than the index.
Despite a six-week mid-quarter pause, the Canadian small capitalization equity market remained in a strong uptrend overall in the fourth quarter and repeatedly set new highs. Its climb was fueled by its large exposure to resources.
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.
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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