Q4 2025 Fund Commentary

Commentary and opinions are provided by AGF Investments Inc..

Market commentary

The Canadian economy faced challenges in 2025 as tariffs imposed by the U.S. and China on Canadian exports weighed on growth.

Performance

The Fund’s relative exposures to Eli Lilly and Co., Pan American Silver Corp. and Loblaw Cos. Ltd. contributed to performance. In November, Eli Lilly became the first health care firm with a market capitalization to cross the USD$1-trillion mark, driven by the sales of its Mounjaro and Zepbound drugs. The company’s third-quarter 2025 earnings beat expectations, and the company raised its full-year earnings forecast.

Relative exposures to Thomson Reuters Corp., The Home Depot Inc. and Constellation Software Inc. detracted from performance. Thomson Reuters reported lower revenue from its legacy businesses, which weighed on the company’s stock. The company’s fourth-quarter 2025 growth is expected to be lower because of lower growth in commercial print volumes, downgrades and cancellations within the government segment, and weaker booking activity in the corporate segment.

At a sector level, security selection and underweight exposure to the utilities sector contributed to performance, as did selection within the health care sector. Security selection and an overweight exposure to the energy sector also contributed to performance. Selection in the industrials, materials and information technology sectors detracted from the Fund’s performance. Overweight exposure to the industrials sector and underweight exposure to the materials sector also detracted from performance.

Portfolio activity

There were no significant trades made in the Fund during the period.

Outlook

The sub-advisor expects the year ahead to be challenging, with renegotiations of the Canada-United States-Mexico Agreement and tariff pressures likely to sustain uncertainty and weigh on Canadian exports. These trade-related risks are also expected to temper business investment sentiment.

Against this backdrop, the sub-advisor believes consumer spending should remain the biggest driver of economic growth in Canada. External and investment-related factors are likely to constrain broader momentum. The Bank of Canada enters 2026 cautiously. While inflation remains near target and economic growth shows resilience, monetary policy direction is data-dependent, with interest rate adjustments possible if economic conditions shift.

In the sub-advisor’s view, the Fund is well positioned to capitalize on growth opportunities. Artificial intelligence innovation and global demand for energy and commodities should drive momentum in resource-heavy sectors such as energy and mining. The sub-advisor maintains a disciplined approach, focusing on sectors with strong earnings momentum and identifying emerging leaders.