Q4 2025 Fund Commentary

Commentary and opinions are provided by Invesco Canada Ltd..

Market commentary

Global economic growth rose during the fourth quarter of 2025, as did financial markets, despite volatility. November brought uncertainty around U.S. Federal Reserve Board monetary policy and artificial intelligence (AI) valuation concerns. December brought more stable returns in U.S. equities and renewed strength in broader developed market equities.

Performance

The Fund’s relative exposures to Royal Bank of Canada and Alphabet Inc. contributed to performance. Royal Bank of Canada reported higher-than-expected results and increased its return on equity target. Alphabet benefited from improved market sentiment following its Gemini product becoming the leading large language model used in AI.

Relative exposures to TELUS Corp. and Liberty Broadband Corp. detracted from the Fund’s performance. TELUS shares fell because of concerns around dividend sustainability and higher debt. The sub-advisor believes these concerns are sentiment-driven rather than fundamental. Liberty Broadband reported persistent subscriber losses and was affected by higher competition than expected.

At the sector level, exposures to the consumer discretionary and consumer staples sectors contributed to the Fund’s performance. Exposures to the information technology and communication services sectors detracted from performance.

Portfolio activity

The sub-advisor added to the Fund a holding in Metro Inc. after the company had a frozen distribution centre failure, which led its shares to fall. The sub-advisor used the short-term disruption to add it to the Fund’s holding in the company at a lower share price. A holding in Chipotle Mexican Grill Inc. was also added to the Fund. In the sub-advisor’s view, behavioural trends and demographics are in the company’s favour. The company’s share price decline during the period allowed the sub-advisor to buy shares at an attractive valuation.

The Fund’s holding in BRP Inc. was sold after the company’s stock price roughly doubled from the lows earlier in the year. Concerns about the renewal of the Canada-United States-Mexico Agreement remain, as well as whether BRP’s production in Mexico will be tariff-exempt. A holding in CGI Inc. was sold because of growing concerns that AI may negatively impact the company’s business. The Fund’s holding in Liberty Broadband was sold as U.S. cable companies continue to see subscriber losses because of competition from fixed wireless access and fibre plans.

Outlook

The long-term value of companies with strong balance sheets, high returns on capital and competitive advantages has not been much affected by periods of volatility. The sub-advisor believes the companies held in the Fund should be resilient, capable of enduring challenging economic environments.