The year 2025 began with stable and healthy economic activity in the United States and rebounding growth in Canada, Japan and China. The Eurozone economies were continuing to lag.
The start of Donald Trump’s second presidency is the dominant story of the first quarter. A blizzard of executive orders on immigration, tariffs, and the federal workforce have brought uncertainty and volatility to the economy and capital markets. The disruptions are such that a homegrown recession, preceded by a period of stagflation, is likely to develop in the United States.
So far, most countries affected by tariffs threats have adopted a wait-and-see attitude. But the prospects of a destructive tariffs war are growing. With lower output and higher prices, the expected repercussions on economic efficiency and overall wealth are dire.
The Federal Reserve kept the Fed fund rate unchanged due to higher uncertainty and an inflation rebound while the Bank of Canada lowered its overnight rate again, having more leeway on the inflation and economic fronts. Long-term interest rates have been stable.
The North American corporate world has not yet seen damage to its revenues and profits, but equity markets have become wary.
The MSCI ACWI Index had a -1.3% return this quarter.
The quarter had a cautious tone considering the macro-economic background. Utilities (7%) and Consumer Staples (6%), both defensive sectors, outperformed. The Energy (9%) sector led. The large integrated companies that dominate this sector rebounded from depressed levels at the beginning of the year.
China’s DeepSeek disrupted the tech industry by launching a lower cost open-source AI model than its American counterparts. Valuations pulled back and the Information Technology(-12%) and Consumer Discretionary (-8%) sectors fell.
The Triasima ACWE Fund had a -3.1% return for the quarter.
Sector allocation added value due to the underweight in the Information Technology sector. Security selection detracted value. Negative for most sectors, it was worse for growth-oriented Information Technology and cyclical Industrials.
The following table presents the top and bottom contributors to relative return:
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*Securities not held in the Fund.
Turnover was elevated during a turbulent quarter. Information Technology holdings were reduced to an even larger substantial underweight. The cash reserve concurrently rose. The Industrial sector maintained its large overweight position.
On the quantitative side, the Fund has superior expectation parameters and higher profits growth than the benchmark. However, volatility metrics are worse, and the Fund’s holdings are more expensive and less profitable.
The MSCI ACWI Index was in an uptrend from October 2023 to February 2025, a powerful 17-month long bull run. This trend broke down late this quarter. The Value style factor outperformed, while Growth and Volatility underperformed.
The fundamental background to worldwide equities has worsened due to the deteriorating relationship by nearly all countries with the United States, where internal strife is rising, the prospect of an international tariff war, and lowered growth expectations.
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.
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