Triasima Canadian Small Capitalization Equity Fund Commentary – Q2 2026

The economy

The war in Iran, which began in late February, defined the second quarter. What started as an energy shock, with the Strait of Hormuz being closed off and Brent oil prices in triple digits, gave way to a fragile diplomatic settlement that formally ended hostilities. However, the peace was quickly contested with Iran threatening ships transiting the Strait without its clearance.  

The United States underestimated its adversary and failed to achieve its foremost objectives: an end to its uranium enrichment program and a regime change. The conflict may have strengthened Iran’s sense of its own power.

Economic growth is below average in most regions of the world. Asian countries, heavy importers of expensive Middle East oil, saw growth expectations fall. Inflation also crept up due to rising energy costs. This tilted Central Banks away from their previous easing bias. 

Labour market weakness remained a widespread lingering concern. A key reason may be the extensive adoption of artificial intelligence tools that improve productivity and suppress job creation. 

The Canadian small capitalization equity market

The S&P/TSX SmallCap Index had a 5.9% return this quarter. 

The Information Technology sector (74%) had a superlative return due to the explosive rally in Blackberry. The Industrials sector (26%) was next, with a broad advance by aerospace, defence technology, and physical infrastructure companies.

The Energy (-8%) and Consumer Discretionary (-1%) sectors lagged. The stated end of the Iran conflict lowered prices for crude oil, triggering a pullback for oil producers. Concurrently, consumer-facing companies face persistent headwinds due to cautious household spending trends.

The Fund

The Triasima Canadian Small Cap Equity Fund had a 7.0% return this quarter. 

Added value was driven by sector allocation, due to the overweight in the Industrials and Information Technology sectors. Security selection within the Industrials and Energy sectors also added value but was partially offset by the selection within the Information Technology and Materials sectors. 

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

*Securities not held in the fund.

Portfolio turnover focused on reducing mining equities while increasing exposure to tangible asset companies in the Real Estate and Industrial sectors; with the latter growing to a large overweight relative to the benchmark.

The Three-Pillar Approach ™

Quantitative parameters are strong. Profitability, Expectations, and Volatility and Risk metrics are better, and Revenues and Profits growth are superior. Valuation metrics, however, indicate the Fund’s holdings are more expensive. 

The Canadian small capitalization equity market has been engaged in a sideways Trend since the end of February, when the Iran war began. The better- performing style factors were Beta (volatility) and Growth.

Lower uncertainty and inflation associated with the war’s end raised the fundamental outlook for Canadian small capitalization equities. Commodity prices pulled back but nonetheless remain elevated enough, while the corporate world keeps on generating growing profits.

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 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.

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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