The second quarter of 2025 was characterized by abrupt and unpredictable shifts in American trade policy by the Trump administration. The April 2 tariff announcement deepened a sharp global equity sell-off. A subsequent pause in tariff escalation only added to volatility, leaving countries scrambling to revisit trade policies and businesses uncertain about pricing, sourcing, and compliance.
The American economy has proved resilient so far considering the trade turbulence and domestic cutbacks. Overall, capital goods orders, household revenues, the labour market, and inflation and interest rates have been stable. Some economic readings are now beginning to deteriorate, however, with the weak housing market possibly being the canary in the coal mine.
Weak industrial production persists, particularly in Germany where GDP growth was revised to zero. Easing inflation allowed the European Central Bank to reduce its overnight rate to 2% as growth concerns mounted.
The MSCI ACWI Index had a 5.7% return this quarter.
Following a sharp decline in the first week of April prompted by the Trump administration’s announcement of new tariffs, equities quickly rebounded once those measures were paused or scaled back. As such, the quarter had a risk-on tone with Information Technology (17%), Communication Services (12%), and Industrials (9%) sectors leading the way.
The Health Care (-9%) and Energy (-9%) sectors lagged. The first is a defensive sector that underperforms during a rising market while the Energy sector underperformed in line with oil prices, which remained soft due to rising global supply and slowing economic activity in China.
The Triasima ACWE Fund had a 7.4% return this quarter.
Most of the added value came from security selection in the Materials, Industrials, and Utilities sectors. Sector allocation also contributed due to underweights positions in the two worst performing sectors: Health Care and Energy.
The following table presents the top and bottom contributors to relative return:
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*Securities not held in the Fund.
The cash reserve had risen during the turbulent first quarter and was re-deployed in the Information Technology and Industrials sectors. The first still has a large underweight while the latter maintains a large overweight.
On the quantitative side, the Fund has superior expectation parameters and higher revenues and profits growth than the benchmark. However, risk metrics are worse, and the Fund’s holdings are more expensive and less profitable.
Following a sideways first quarter of 2025, the MSCI ACWI Index experienced a sharp, V-shaped pullback and rebound early this quarter. It next set multiple new all-time highs in May and June. Its trend is upward. The Beta factor strongly outperformed, with the Growth factor a distant second.
The fundamental background to worldwide equities worsened somewhat due to the unpredictability of American trade policies and prospects of lower economic growth in the United States.
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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