Triasima Canadian Equity Strategy Commentary – Q1 2026

The economy

Economic growth was average in advanced and emerging countries as the year 2026 began; a fair state of affairs. In the United States, the economy was supported by spending by higher-income households and infrastructure construction, buoyed by artificial intelligence-related investments. The overall narrative was managed global inflation and easing monetary cycles. 

The war in Iran, the defining event of the first quarter, upended this scenario in late February, adding a geopolitical dose of uncertainty to the outlook. Concerns about tariffs rapidly receded in the background.

So far, the main impacts of the war have been increases in the price of oil and other commodities, a rise in interest rates, and a strong American dollar due to its worldwide reserve currency status. This last effect is particularly damaging to emerging countries’ economies. Oil usage per dollar of GDP is at a record low but economic activity is nonetheless bound to soften and inflation to increase with a lag. 

Canada, a net energy exporter, will see a boost to national income but household spending will be hurt, and so will it be in the United States. Europe and Asia are net energy importers and face the prospects of higher economic input costs and weaker domestic spending as well 

The Canadian equity market

The S&P/TSX Composite Index had a 3.9% return this quarter.   

Sectoral returns were dispersed. Unsurprisingly, with the price of oil climbing by over 70%, the Energy (30%) sector led. The Materials (+11%) and Utilities (+11%) sectors were next. The Materials sector includes the important precious metals producers’ subsector, while Utilities companies produce energy, which gained in price.

Hurt by rising interest rates, the Information Technology (-23%) sector faltered badly. Real Estate (-4%) pulled back for the same reason. 

The portfolio

The Triasima Canadian Equity Strategy had a 5.0% return this quarter.

Security selection added value, only a single sector with a negative contribution. The Energy and Financial sectors led. Sector allocation detracted value because the strong Energy sector was underweighted and the lagging Consumer Discretionary sector overweighted. 

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

*Securities not held or underweighted in the portfolio.

Adjustments focused on replacing poorly rated holdings, often by others with a Value style factor orientation or real assets emphasis. Notable additions include fertilizer producer Nutrien, defensive cheese producer Saputo, Canadian National Railway and National Bank. Three Industrials names were eliminated as well as Brookfield Corp. Shopify’s weighting was reduced. The portfolio maintains an important 18% position in precious and base metals producers. 

The Three-Pillar Approach™

On the quantitative side, the portfolio has superior profitability parameters, as well as higher earnings growth. 

The Canadian equity market uptrend has weakened considerably. New highs were set in January and February, but the upward momentum waned after the war’s onset. A sideways period may be at hand. The Momentum and Earnings Variability factors were strongest. 

Notwithstanding its large 18% Energy sector weight, the fundamental background to Canadian equities deteriorated in the quarter due to the Iran war. Fortunately, corporate profits keep on growing. 

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.