Investi
We are one of the two managers selected by INVESTI.
As we move through the second half of 2025, the market backdrop remains complex. While Q2 ended with a risk-on rally, macroeconomic and geopolitical uncertainties continue to cloud the outlook. Nonetheless, we believe disciplined, fundamentals-driven investing will remain key to delivering long-term outperformance.
A Cautious Second-Half Macro Outlook
The U.S. and Canadian economies are navigating divergent forces. While fiscal spending may support short-term demand, broader risks remain. These include renewed tariff threats from the Trump administration, sticky inflation pressures, elevated bond yields and increased geopolitical tensions. The U.S. Federal Reserve remains in wait-and-see mode as mixed economic data and policy uncertainty delay potential rate cuts. In Canada, macro conditions are somewhat more stable, but volatility could return if global trade conflicts escalate.
Small-Cap Equities: Risks and Resilience
In both the U.S. and Canada, small-cap equities rebounded in Q2 but face ongoing challenges. Speculative names led late-quarter gains, creating headwinds for quality-focused portfolios. However, we believe market leadership will return to fundamentally strong companies. Canadian small caps remain attractively valued, particularly as interest rate cuts appear increasingly likely later this year. In the U.S., small caps also offer compelling opportunities, though policy volatility may lead to uneven performance in the near term.
High-Quality Companies in Focus
Our portfolios continue to prioritise high-quality businesses with strong balance sheets, recurring earnings and clear competitive advantages. With average projected earnings growth of over 25% annually and meaningful valuation discounts relative to intrinsic value, we believe our holdings are well positioned to deliver risk-adjusted outperformance across full market cycles.
