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 yield curve rose across maturities exceeding one year but dipped at the short end, sustaining the steepening trend driven by bifurcated economic data and elevated government debt issuance. The FTSE Canada Universe Bond Index (-0.3%) ended the fourth quarter with a yield to maturity of 3.5%, surpassed by the TSX Preferred Share Index (5.0%).
The benchmark’s equity indices all had positive returns: S&P/TSX Composite Index (6.3%), S&P 500 Index (1.0%), and MSCI EAFE (3.3%). Cyclical sectors like Materials, Consumer Discretionary, and Financials outperformed.
The Triasima Balanced Income Fund had a 1.9% return this quarter, versus 2.8% for its benchmark. For 2025, it had a 12.2% return versus 17.0% for its benchmark.
Canadian equity selection weighed on results, as the Fund's orientation towards dividend-paying stocks lagged in a market that heavily rewarded cyclical industries, especially gold miners.
Amid a relatively calm bond environment and strong equity markets, the Fund’s fixed income allocation drifted down from 34.2% to 33.3%, moving further below the benchmark’s 40%. Concurrently, the equity allocation rose from 65.8% to 66.7%.
Within equities, defensive positions were reduced in favour of quality cyclical and growth opportunities. The weightings of the Utilities and Consumer Discretionary sectors grew. Two Information Technology companies benefiting from the AI supply chain were added.
Bond duration drifted downwards to 7.0 years, slightly above the benchmark (6.9 years). The Fund’s current income yield stands at 2.8%.
On the quantitative side, the equities held by the Fund have better valuation, profitability, and risk and volatility metrics than the equity benchmark. Earnings growth is also higher. However, expectations parameters are worse and revenue growth lower.
Interest rates moved up somewhat this quarter. But, overall, they seesawed in 2025 and their trend is sideways. On the equity side, all three equity indices included in the benchmark were in uptrends.
The fundamental background to equities improved further, fully offsetting the deterioration of the first half of 2025. Like the previous quarter, profits kept on growing while inflation and interest rates are relatively 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.
The benchmark for the Triasima Balanced Income Fund is composed of the following indexes: 5% FTSE Canada 91 Day T-Bill, 30% FTSE Canada Universe Bond, 5% S&P/TSX Preferred, 35% S&P/TSX Composite, 15% S&P 500 Net (CAD) AND 10% MSCI EAFE Net (CAD).
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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