Q3 2025 Fund Commentary

Market commentary

Canada’s economy faced challenges in the third quarter as trade tensions with the U.S. continued. This weighed on trade activity and the manufacturing sector. Household spending demonstrated resiliency despite a slowing labour market and economic uncertainty.

The Bank of Canada (BoC) lowered its key interest rate to 2.50%, citing a weaker labour market and easing inflation. The BoC emphasized a cautious approach to balancing growth and price stability. Canada’s unemployment rate was 7.1%, the highest since 2021, with youth unemployment rising sharply.

The Canadian equity market posted strong gains, with the S&P/TSX Composite Index rising 12.5%. Materials, information technology, energy and financials outperformed. The energy sector performed largely in line with the market, challenged by lower oil prices and trade-related issues.

Performance

The Fund’s relative exposure to Kinross Gold Corp., Agnico Eagle Mines Ltd. and Constellation Software Inc. contributed to performance. Both Kinross and Agnico Eagle Mines benefited from high free cash flow and stable operations. A lack of exposure to Constellation Software was a contributor as its stock underperformed the market after its founder stepped down for health reasons.

Relative exposure to Shopify Inc., Barrick Mining Corp. and Wheaton Precious Metals Corp. detracted from the Fund’s performance. Underweight exposure to Shopify detracted as the stock rose, reflecting solid growth, higher transaction volumes and enterprise wins. A lack of exposure to Barrick Mining and Wheaton Precious Metals detracted as both companies benefited from strength in precious metal prices.

At the sector level, stock selection in industrials and utilities contributed to the Fund’s performance. Exposure to materials and stock selection in materials and financials detracted from performance.

Portfolio activity

The sub-advisor added Waste Connections Inc. for its stable fundamentals and ability to generate returns on capital and expand margins through efficiency improvements. ARC Resources Ltd., CGI Inc. and Canadian National Railway Co. were increased based on their risk-reward profiles. Empire Co. Ltd., Loblaw Cos. Ltd. and Bombardier Inc. were reduced based on their risk-reward profiles.