Q4 2025 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Canada’s economy showed signs of strain in the fourth quarter as U.S. tariffs and weakening trade flows continued to pressure manufacturing and export?oriented sectors. Business confidence softened, and labour?market momentum faded, although household spending remained stable heading into year?end.

The Bank of Canada held its policy rate at 2.25% in December following its 25-basis-point rate cut in October, citing moderating inflation and persistent economic uncertainty. Canada’s unemployment rate rose to 6.8% in December, as labour?force growth outpaced hiring and trade?sensitive industries showed renewed weakness.

The S&P/TSX Small Cap Index continued its strong momentum in the fourth quarter, advancing over 10%, supported by improving risk appetite. Smaller, domestically focused industrials and information technology companies outperformed as easing financial conditions and stabilizing economic indicators improved sentiment. Mid?cap resource companies saw support from higher gold prices late in the quarter, while base?metals producers benefited from firmer global demand. Energy?oriented small caps lagged the broader small?cap index as crude oil prices weakened.

Performance

Stock selection in the energy sector contributed to the Fund’s performance. An overweight allocation to the consumer discretionary sector and lack of exposure to the utilities sector also contributed to performance.

Holdings in Aritzia Inc., CES Energy Solutions Corp. and OceanaGold Corp. contributed to the Fund’s performance. Aritzia reported strong U.S. revenue growth in November. CES Energy Solutions continued to expand into new regions, enabling growth despite a difficult energy market. OceanaGold was supported by strong commodity pricing, exploration success and progress securing key permits for growth projects.

An underweight allocation to, and stock selection in, the materials sector detracted from the Fund’s performance as gold, copper and solver prices were strong during the quarter. Stock selection in the information technology sector also detracted from performance.

Holdings in Pan American Silver Corp., goeasy Ltd. and Lumine Group Inc. detracted from the Fund’s performance. As an alternative lender, goeasy faced rising credit concerns tied to Canadian employment trends. The company also announced that its CEO stepped down for health reasons. Lumine Group, an acquirer and provider of software solutions that had performed well in the first half of the year, pulled back amid a broader shift in sentiment toward software on concerns about displacement from artificial intelligence.

Portfolio activity

Holdings in Zedcor Inc., Premium Brands Holdings Corp. and Black Diamond Group Ltd. were added to the Fund as the sub-advisor believed the companies had attractive growth profiles and catalyst potential.

In energy-related businesses, Fund holdings in Tamarack Valley Energy Ltd., Headwater Exploration Inc., Kelt Exploration Ltd. and CES Energy Solutions were increased as the sub-advisor believes the companies offer strong execution, attractive growth and catalyst potential. Outside of resources, holdings in Chartwell Retirement Residences, Trisura Group Ltd., Badger Infrastructure Solutions Ltd., Kits Eyecare Ltd., Exchange Income Corp., BRP Inc., Hammond Power Solutions Inc. and Boyd Group Services Ltd. were increased given what the sub-advisor believes are quality attributes and attractive risk/reward profiles.

Fund holdings in ATS Corp., Winpak Ltd., AG Growth International Inc., Docebo Inc., Nuvista Energy Ltd. and Cargojet Inc. were sold as the sub-advisor believes there were better growth outlooks and risk/reward profiles elsewhere. A holding in Definity Financial Corp. was sold after strong share price appreciation contributed to valuation and market-capitalization considerations, in the sub-advisor’s view.

Fund holdings in New Gold Inc., Alamos Gold Inc., Triple Flag Precious Metals Corp. and OR Royalties Inc. were reduced given share price strength and the rise in gold prices.