Triasima ACWE Fund commentary – Q4 2023


The economy

The effects of the rise of interest rates in 2021 and 2022 continue permeating economies and are causing slowdowns. Real gross domestic product (GDP) among major advanced countries is predicted to grow by only 0.9% in 2024, down from the expected 1.6% in 2023. The strong labor market, which supported confidence and spending, has now been witnessing declining job openings.  

Fortunately, inflation levels peaked 18 months ago already and have fallen since. Monetary policy tightening by central banks is winding down, with several opting to pause their rate hike efforts. In its latest meeting, the U.S. Federal Reserve signaled forthcoming cuts in 2024 for its benchmark rate.

The United States, supported by fiscal stimulus, continues to lead the global economy. Canada, meanwhile, was aided by significant immigration in 2023, but its GDP per capita receded. 

Geopolitical risks persist. The Israel-Hamas conflict erupted this quarter while the war in Ukraine is nearing two years of age.  

China's economy remains fragile as the country transitions from export dependent to internally service driven. The government is expected to concentrate on targeted fiscal measures to address internal economic challenges.

The world equity market

The MSCI ACWI had an 8.6% return this quarter and 19.3% for 2023. 

The prevailing theme of the quarter was "risk-on", driven by weaker inflation and a dovish stance from the Federal Reserve, leading to a significant rise in previously out-of-favor sectors. Consequently, Information Technology (+15%), Real Estate (+13%), and Industrials (+11%) emerged as the top-performing sectors; equities within these three sectors being sensitive to lower interest rates.

Conversely, Energy (-5%) was the only negative sector. The price of oil declined, driven by concerns over demand and increased shale oil production.

The Fund

The Triasima ACWE Fund had a 6.0% return for the quarter and 16.2% for 2023.

The bulk of the quarterly underperformance is explained by the security selection in the Consumer Discretionary and Financials sectors. The Japanese retailers Abc Mart and J. Front Retailing, and American insurer Kinsale Capital showed disappointing sales growth. Japanese bank Mitsui Financial had to compose with declining net interest margins.

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

  Positive impact

  Negative impact

Crowdstrike Holdings Inc.

Kinsale Capital Group Inc.

Gartner Inc.

ABC-Mart Inc.

Cia de Saneamento Do Pa

J Front Retailing Co Ltd

Corp Inmobiliaria Vesta SAB

Sumitomo Mitsui Fin Group

Palo Alto Networks Inc.

Games Workshop Group PLC.


Cyclicality was added to the portfolio through additions to the Consumer Discretionary and Industrials sectors. The cash reserve fell from 7% to 2% as a result. At quarter-end, the Fund has a large overweight in Industrial securities and large underweight in Information Technology.

The Three-Pillar Approach ™

On the quantitative side, the Fund has superior volatility and expectations parameters relative to the benchmark. Valuation metrics indicate the Fund is more expensive. 

The MSCI ACWI has mainly been in recovery mode in 2023, following the 2022 drop. The strong fourth quarter move upgrades the trend rating to uptrend status. Factors associated with volatility and risks outperformed this quarter.

The fundamental background to worldwide equities has improved in recent months, mainly due to the interest rates pullback, and despite the stagnant economies of Canada and Europe. The equity market upsurge has borrowed from the expected 2024 performance, which nonetheless remains above average and good.