Q4 2025 Fund Commentary

Commentary and opinions are provided by JPMorgan Asset Management (Canada) Inc..

Market commentary

International equities rose modestly during the fourth quarter of 2025 as artificial intelligence (AI) enthusiasm was tempered by shifting monetary policy signals and evolving trade dynamics. Value stocks outperformed growth stocks. U.S. equities rose, supported by U.S. Federal Reserve Board interest rate cuts and progress in U.S.-China trade negotiations. European stock markets rose, benefiting from a positive earnings outlook and less tech-heavy composition. Japan’s Tokyo Stock Price Index led regional performance under new Prime Minister Sanae Takaichi.

Commodities showed mixed results, with oil prices falling and precious metals prices reaching all-time highs. Emerging markets had varied performance, with Chinese tech stabilizing and South Korean and Taiwanese equities consolidating after strong year-to-date gains.

Performance

The Fund’s relative overweight exposures to SSE PLC, Indra Sistemas SA and NatWest Group PLC contributed to performance. SSE announced a 33-billion-pound, five-year investment plan in the U.K.’s electricity network. The company also had an equity raise, which lowered its balance sheet risk. Indra Sistemas reported growth in its defence division as defence spending rises in Spain and other parts of the world. NatWest Group saw growth in income and returns driven by customer activity and cost management.

Relative overweight exposures to 3i Group PLC, Rakuten Group Inc. and Sony Group Corp. detracted from the Fund’s performance. 3i Group’s interim results showed a slowdown in trading at its key asset, Action Nederland BV, which accounts for roughly 60% of its net asset value. Trading in France was weak, and there were concerns that this could signal a weakening consumer across Europe. Rakuten Group stock fell because investors were focused on the coming earnings challenge from the removal of the Bank of Japan’s low-cost funding scheme. Sony Group was affected by a cautious long-term outlook from its management.

At the sector level, stock selection in the information technology and industrials sectors contributed to the Fund’s performance. Selection in the financials and consumer staples sectors detracted from performance.

At the regional level, stock selection in the U.K. contributed to the Fund’s performance. Underweight exposure to the Pacific Rim region and overweight exposure to the U.K. contributed to performance. Selection in Japan detracted from performance.

Portfolio activity

The sub-advisor added to the Fund a holding in Tokyo Electron Ltd. as a strategic play on AI infrastructure buildout. The shift from consumer applications to data centre and AI should be positive for the company. A holding in AstraZeneca PLC was increased based on the company’s growth, which is driven by an oncology portfolio and expansion in rare diseases.

The Fund’s holding in Deutsche Boerse AG was sold because of concerns over the risk to the business from AI. The Fund’s holding in Rakuten Group was reduced to take profits after strong share price performance.

Outlook

The Fund ended the period with underweight exposure to continental Europe and the Pacific Rim, and overweight exposure to the U.K. and the U.S. At the sector level, the Fund had underweight exposures to the health care and consumer staples sectors, and overweight exposures to the financials and consumer discretionary sectors. Currently, the Fund has overweight exposure to companies that are classified as either premium or quality. The sub-advisor believes that emphasizing superior businesses with greater control over their own trajectories will be crucial in the year ahead.

In the sub-advisor’s opinion, fiscal stimulus in Europe and further U.S.-dollar weakness may favour non-U.S. equities. The sub-advisor believes that 2026 should be a good year for global profits, expecting them to rise around 12.4%, with earnings growing across industry groups in every region. In particular, companies in the S&P 500 Index that are not one of the “Magnificent 7” are forecast to grow profits by 11.2%, after the last few years of relatively limited progress. Outside the U.S., the sub-advisor sees profits in emerging markets growing 15.2% in 2026. In the sub-advisor’s view, the outlook for future AI demand is uncertain. For these reasons, the sub-advisor believes in diversification across the AI ecosystem, across regions and across public markets.

While the macroeconomic picture is expected to be uncertain and volatile in 2026, this can open opportunities for long-term investors, according to the sub-advisor. The sub-advisor is taking advantage of the environment to find companies where share prices have become detached from long-term fundamentals.