
In Q4 2024, U.S., Canadian and Asian markets faced volatility. Small-cap stocks lagged but are positioned for recovery in 2025, supported by expected rate cuts, policy support and rising consumer demand.
Market Review
U.S. Market Overview
The U.S. market experienced significant volatility in the fourth quarter of 2024, driven by shifting Federal Reserve policies and political developments. After signaling an easing cycle earlier in the year, the Federal Reserve tempered expectations for aggressive rate cuts in 2025, citing a more data-dependent approach. This shift ended a robust equity rally that had gained momentum from July through November. The initial market optimism was fueled by a resilient U.S. economy, the Federal Reserve’s monetary easing and a Republican sweep in the U.S. elections, promising lower taxes and deregulation. However, December saw a broad market pullback as investors adjusted to the Fed’s hawkish tone and uncertainties surrounding the incoming Trump administration.
Despite a weak December, U.S. equities posted strong annual gains. The NASDAQ led with mid-single-digit growth in Q4 and a 30% gain for the year, driven by the Magnificent 7 tech stocks. The S&P 500 followed with a 25% annual increase, marking its best two-year performance since the late 1990s. In contrast, small-cap stocks underperformed, with the Russell 2000 lagging due to a December selloff. The Russell 2500 Index gained 12% annually but struggled in Q4. U.S. Treasuries saw rising yields, marking a four-year uptrend, while the U.S. dollar had its strongest year since 2015. Cryptocurrencies, particularly Bitcoin, nearly doubled in value. Commodities were mixed: oil prices were flat for the year, natural gas rebounded, and gold surged 27%.
U.S.-Canada Market Dynamics
The Federal Reserve’s pivot in December also impacted Canadian markets. The Bank of Canada had mirrored the Fed’s earlier easing stance, contributing to equity gains throughout most of Q4. However, the Fed’s hawkish turn led to a market pullback in December, erasing much of the progress made earlier in the quarter. Canadian equities followed similar trends, with small-cap stocks initially outperforming before succumbing to late-year volatility. The TSX Small Cap Index underperformed the TSX Composite by 2.8%, continuing its losing streak against larger-cap stocks.
Key drivers for potential small-cap recovery in both markets remain intact: historically low valuations, anticipated interest rate cuts, diminished political uncertainty, stronger earnings growth and an expected resurgence in M&A activity. Canadian companies with significant U.S. exposure particularly benefited from the pro-business policies emerging from the U.S. election outcomes.
Canadian Market Overview
Despite December’s setback, Canadian equities posted a solid performance in 2024, echoing the U.S. market trajectory. Commodity prices played a central role, with oil slightly higher in Q4 but flat for the year. Natural gas rebounded from depressed levels and gold prices soared 27%, marking their best year since 2010. The Canadian dollar faced headwinds due to the strengthening U.S. dollar, further influenced by the Fed’s policy shift.
Canadian small-cap stocks struggled to maintain early Q4 momentum, falling behind large caps. However, expectations for interest rate cuts by the Bank of Canada in 2025, combined with reduced political uncertainty and stronger corporate earnings forecasts, offer a positive outlook for small-cap performance. Canadian companies in the resource and energy sectors are poised to benefit from global demand dynamics and potential policy shifts in the U.S.
Asian Market Overview
Asian markets faced mixed outcomes in Q4, heavily influenced by U.S. political shifts and regional instability. The strengthening U.S. dollar, driven by tariff concerns under the Trump administration, diverted capital away from Asia. Political upheaval in South Korea and Japan further dampened investor sentiment. Despite these factors, the MSCI Asia Pacific Index gained 8% in 2024, with China outperforming the region for the first time since 2020, rising 9%. Taiwan, Malaysia, India, and Japan also contributed to regional gains, driven by corporate earnings growth.
China’s stimulus measures, including rate cuts and significant market stabilization funds, helped stabilize its equity markets. However, concerns over property sector weakness and local government debt persisted. Southbound capital flows into Hong Kong equities reached historic highs, reflecting investor confidence in undervalued markets. However, structural challenges in real estate and logistics sectors highlighted persistent risks.
Quarterly results by strategy
Canadian Small Cap Equity Strategy

Investment Performance (%)
The following table shows the investment performance of the Van Berkom Canadian Small Cap Composite, compared to the S&P/TSX Canadian Small Cap Index and the S&P/TSX Composite Index (as at December 31, 2024).
Returns are calculated using the time-weighted method and presented gross of management and trustee fees and withholding taxes. Returns are annualized for periods longer than 12 months.
*Note: Results are the BMO Small Cap Blended Weighted Index from June 30, 1992 to December 31, 1999 and thereafter the S&P/TSX Canadian Small Cap Index.
** Note : June 30, 1992
Portfolio Positioning
In Q4 2024, our portfolio delivered a solid return, outperforming the TSX Small Cap Index. This consistent outperformance was driven by strategic sector allocation and strong security selection.
Our sector allocation added 1.2% to relative performance, despite a 1.4% drag from the energy sector, where we have minimal exposure. Energy stocks rallied 12.5% in Q4, supported by rising oil prices—up 5% in USD and 12% in CAD. However, our focus on other sectors offset this headwind. Security selection contributed another 1.0% to outperformance, particularly within consumer discretionary, real estate, materials and industrials. Our targeted approach to high-quality companies in these sectors enabled us to navigate market volatility effectively.
Over the year, sector allocation presented a 5.6% drag, primarily due to a 2.8% headwind from the materials sector, which surged 25.7%. Our limited exposure to this sector, which comprises over 32% of the TSX Small Cap Index, hindered relative returns. Strong commodity prices, notably silver and gold (both up 29%) and copper (up 7%), fuelled this sector’s performance. Despite this movements, our security selection delivered an impressive 8.5% of relative outperformance. Notable gains came from consumer discretionary, real estate, IT and financial sectors, highlighting our commitment to identifying high-growth, attractively valued companies with solid growth prospects.
Our disciplined, bottom-up stock-picking approach continues to drive results. We are particularly proud of our security selection, which remains the cornerstone of our strategy. Despite our strong absolute return, some portfolio holdings experienced valuation multiple contractions in 2024, limiting their performance despite solid financial results and improved guidance. We believe that this compression is temporary and anticipate a reversal over the medium term. Many of our holdings are trading well below intrinsic value, positioning the portfolio for significant share price appreciation as market conditions stabilize.
Our significant Q4 contributors to performance:
- MDA Space (+156.3%) in 2024, driven by strong revenue growth in satellite systems and sustained momentum in robotics and geointelligence.
- Aritzia (+94.3%), rebounding from 2023 with solid revenue and margin recovery, boosted by strong e-commerce sales and strategic expansion.
- CWB Financial Group (+97.8%), following National Bank’s acquisition offer, providing a 110% premium to CWB’s share price.
- Wajax Corp (-26.9%) in 2024, due to weak equipment sales, delayed financing programs and lower margins from cautious customer spending.
- Mattr Infrastructure (-16.6%), amid a transition year marked by facility investments and softer demand.
- ATS Automation (-23.2%), impacted by reduced EV-related bookings and a suspended battery assembly contract, despite strong Life Sciences performance and strategic acquisitions supporting long-term growth.
Portfolio Changes
In Q4, we actively managed our model portfolio to enhance its long-term growth, focusing on high-conviction investments and seizing opportunities in undervalued small-cap stocks. Key portfolio adjustments included strategic additions, trims and divestitures to optimize performance and manage risk..
Increased Positions
- MDA Space: Expanded our holding due to continued strong revenue growth in satellite systems and a robust contract pipeline.
- Mattr Infrastructure: Increased our position, anticipating long-term growth from recent facility expansions and a strategic acquisition.
- 5NPlus: Enhanced our stake, reflecting confidence in its specialty materials business and future growth prospects.
Reduced Positions
We reduced our holdings in the following names to manage valuations and balance portfolio weightings after substantial gains: MDA Space, Aritzia and Badger Infrastructure.
New Additions
- Winpak: Initiated a position in this North American packaging materials manufacturer due to its strong market position in flexible and rigid packaging for food, beverages and healthcare sectors.
- Groupe Dynamite: Added this omnichannel women’s apparel retailer with 300 North American stores, capitalizing on its retail growth potential.
- Dye & Durham: Entered this leading cloud-based legal software and banking infrastructure provider, recognizing its strong M&A track record and scalable business model.
- D2L Inc.: Invested in this global learning technology company, driven by growing demand for digital learning tools.
Divestitures
- Hamilton Thorne: Fully divested following a takeover proposal.
- Enghouse Systems and Colliers International: Sold to reallocate capital into more promising small-cap opportunities.
Outlook
As the Bank of Canada and the Federal Reserve begin a new cycle of interest rate reductions, history suggests a favourable environment for equities, particularly small-cap stocks. Historically, during periods of rate cuts—such as the early 2000s and 2008-2009—Canadian small-cap stocks outperformed large caps. With anticipated rate cuts in 2025 aimed at supporting economic growth and easing financing conditions, small caps are well-positioned for strong returns.
Additionally, the weak Canadian dollar and attractive valuations make Canadian small caps appealing targets for strategic buyers and private equity. After four takeovers in 2024, more acquisitions could occur in 2025. However, several uncertainties could impact markets. The upcoming Canadian federal election, following the Prime Minister’s resignation and prorogued parliament, may introduce market volatility depending on political agendas. In the U.S., President Trump’s return brings potential volatility.
While lower taxes and deregulation support equities, proposed tariffs and immigration crackdowns could drive inflation, complicating the Federal Reserve’s rate-cutting plans. These conflicting policies could disrupt markets, impacting Canadian firms with U.S. exposure. We have assessed these risks and remain confident in our portfolio’s resilience. Geopolitical risks may also rise, with Trump’s foreign policy potentially affecting global markets. Although geopolitical events historically have limited long-term impact on equities, short-term volatility is possible. Investors should prepare for policy shifts and market reactions in 2025.
Earnings for Canadian companies are expected to grow modestly, though from historically high profit margins. However, elevated valuation multiples present a challenge. Future equity gains will likely depend on earnings growth, which may not meet current market expectations.
In this environment, we believe company-specific fundamentals will drive returns more than thematic or momentum-driven trends. A disciplined focus on valuations and fundamentals will be critical for success. Our small-cap portfolio is well-positioned for this shift, offering high-quality holdings with strong return prospects.
Reduced Positions
We reduced our holdings in the following names to manage valuations and balance portfolio weightings after substantial gains: MDA Space, Aritzia and Badger Infrastructure.
New Additions
- Winpak: Initiated a position in this North American packaging materials manufacturer due to its strong market position in flexible and rigid packaging for food, beverages and healthcare sectors.
- Groupe Dynamite: Added this omnichannel women’s apparel retailer with 300 North American stores, capitalizing on its retail growth potential.
- Dye & Durham: Entered this leading cloud-based legal software and banking infrastructure provider, recognizing its strong M&A track record and scalable business model.
- D2L Inc.: Invested in this global learning technology company, driven by growing demand for digital learning tools.
Divestitures
- Hamilton Thorne: Fully divested following a takeover proposal.
- Enghouse Systems and Colliers International: Sold to reallocate capital into more promising small-cap opportunities.
Outlook
As the Bank of Canada and the Federal Reserve begin a new cycle of interest rate reductions, history suggests a favourable environment for equities, particularly small-cap stocks. Historically, during periods of rate cuts—such as the early 2000s and 2008-2009—Canadian small-cap stocks outperformed large caps. With anticipated rate cuts in 2025 aimed at supporting economic growth and easing financing conditions, small caps are well-positioned for strong returns.
Additionally, the weak Canadian dollar and attractive valuations make Canadian small caps appealing targets for strategic buyers and private equity. After four takeovers in 2024, more acquisitions could occur in 2025. However, several uncertainties could impact markets. The upcoming Canadian federal election, following the Prime Minister’s resignation and prorogued parliament, may introduce market volatility depending on political agendas. In the U.S., President Trump’s return brings potential volatility.
While lower taxes and deregulation support equities, proposed tariffs and immigration crackdowns could drive inflation, complicating the Federal Reserve’s rate-cutting plans. These conflicting policies could disrupt markets, impacting Canadian firms with U.S. exposure. We have assessed these risks and remain confident in our portfolio’s resilience. Geopolitical risks may also rise, with Trump’s foreign policy potentially affecting global markets. Although geopolitical events historically have limited long-term impact on equities, short-term volatility is possible. Investors should prepare for policy shifts and market reactions in 2025.
Earnings for Canadian companies are expected to grow modestly, though from historically high profit margins. However, elevated valuation multiples present a challenge. Future equity gains will likely depend on earnings growth, which may not meet current market expectations.
In this environment, we believe company-specific fundamentals will drive returns more than thematic or momentum-driven trends. A disciplined focus on valuations and fundamentals will be critical for success. Our small-cap portfolio is well-positioned for this shift, offering high-quality holdings with strong return prospects.
U.S. Small Cap Equity Strategy

Investment Performance (%)
The following table shows the investment performance of the Van Berkom U.S. Small Cap Composite (in U.S. dollars), compared to the Russell 2000 Small Cap Index and the S&P 500 Index (as at December 31, 2024).
Returns are calculated using the time-weighted method and presented gross of management and trustee fees and withholding taxes. Returns are annualized for periods longer than 12 months.
* Note : June 30, 2000
Portfolio Positioning
Our U.S. small-cap strategy outperformed its benchmark in Q4 2024 despite a volatile market. The portfolio delivered strong relative returns during both the bullish market in November and the risk-off environment in December. This resilience highlighted the strength of our fundamentals-driven investment approach. Notably, 86% of our portfolio companies exceeded earnings expectations by an average of 12%, reinforcing our conviction in our holdings.
Attribution analysis showed that both sector allocation and security selection contributed to outperformance. Superior stock picking in Consumer Discretionary, Financials and Healthcare sectors drove positive returns, while modest underperformance in Information Technology, Industrials and Consumer Staples slightly offset gains. Our lack of exposure to the underperforming Real Estate, Energy and Materials sectors further supported results. Additionally, overweight positions in Financials and underweight exposure to the weak Healthcare sector added value. A lower weighting in the outperforming Information Technology sector and higher exposure to Consumer Discretionary modestly detracted from performance.
Despite underperforming our benchmark earlier in 2024, our portfolio fundamentals remained strong. Robust earnings growth, superior ROIC and ROE, and attractive valuations did not initially translate into relative gains. However, market conditions improved, so we achieved five consecutive months of outperformance, halving our earlier underperformance by year-end.
The Information Technology sector was a key drag on full-year performance due to our limited exposure to high-flying stocks and sub-sectors that did not align with our investment strategy. This narrow, momentum-driven market environment was challenging, but as conditions normalized, our fundamentals-driven approach regained traction. Looking ahead, we remain confident in the long-term strength of our small-cap strategy. Our portfolio is positioned with high-quality companies that offer solid earnings growth, strong returns on capital and compelling valuations.
Significant contributors to performance in Q4 2024:
- Five9 (+41%), after strong earnings and an improved outlook.
- Primoris Services (+31%) in Q4 and 140% in 2024, driven by robust growth in utility-scale solar projects.
- Shake Shack (+26%) in Q4, due to strong sales growth and operational improvements.
- Victory Capital (+20%) in Q4 and doubled for the year, contributing significantly to returns.
- StoneX Group (+19%), Paylocity (+20%) and HealthEquity (+17%), amid the Federal Reserve’s policy shift.
Stocks that detracted from performance in Q4 2024:
- Installed Building Products (-0%) in Q4, hurt by rising interest rates impacting the housing market.
- Fox Factory (-00.0%) and Brunswick (-00.0%), due to weak consumer demand.
- Maximus (-18.0%), amid concerns over government spending cuts under the new DOGE entity.
Portfolio Changes
In Q4 2024, we actively adjusted our portfolio by adding high-quality investments and exiting positions to optimize long-term performance.
Portfolio Additions
- The Pennant Group (PNTG): Initiated a position in this healthcare services provider due to its scalable, decentralized model and strong organic and acquisition-driven growth in fragmented markets.
- Chart Industries (GTLS): Added for its leadership in energy transition technologies, hydrogen and carbon capture markets, in addition to its solid growth prospects after the Howden acquisition.
- Willscot (WSC): Invested in this leader in modular space solutions due to its dominant market share, scalable operations and resilient growth strategy.
Portfolio Increases
- Maximus, Installed Building Products and FTI Consulting: Increased stakes in these names to capitalize on attractive valuations and long-term growth potential.
Portfolio Reductions
- Reduced exposure in Marriott Vacations Worldwide and Houlihan Lokey due to valuation concerns.
- Took profits in well-performing stocks like StoneX, Shake Shack, Hamilton Lane, Globus Medical, Primoris Services, Qualys, Grand Canyon Education and Planet Fitness while maintaining long-term confidence in these holdings.
Divestitures
- Envestnet: Sold after Bain Capital’s acquisition at a premium.
- MarketAxess: Exited due to slowing growth and rising competitive pressures from TradeWeb.
- Fox Factory: Divested following operational missteps and balance sheet concerns after the Marucci Sports acquisition.
Outlook
The outlook for 2025 presents a mix of opportunities and risks driven by U.S. political developments and global economic dynamics. While President Trump’s election suggests a business-friendly environment with lower taxes and deregulation, potential tariffs and strict immigration policies could reignite inflation. These conflicting policies may disrupt the Federal Reserve’s easing cycle, possibly halting interest rate cuts and tightening financial conditions. The newly proposed DOGE department’s aggressive budget cuts could have deflationary effects, further adding complexity to market expectations. The cumulative impact of these policies could lead to significant market volatility.
Geopolitical uncertainty also looms, with Trump’s agenda potentially influencing global conflicts and alliances. Historically, geopolitical events have had minimal long-term effects on U.S. equities, but short-term volatility may increase. Combined with policy shifts and heavy rhetoric, investors should brace for market swings in 2025.
Despite these uncertainties, the U.S. economy remains resilient. Strong corporate balance sheets, healthy consumer finances and steady capital expenditures contribute to sustained economic growth. The ongoing AI boom may further support productivity gains. However, the trajectory of interest rates remains a key risk. The direction and pace of rate changes could significantly affect consumer and business sectors, making it difficult to predict how markets will respond. Corporate earnings are expected to grow modestly in 2025, although elevated valuation multiples could limit equity market gains. After two years of strong stock performance outpacing earnings growth, future returns will likely depend on companies meeting high earnings expectations. This environment demands a focus on fundamentals and valuation discipline.
We believe company-specific fundamentals will drive performance in 2025, especially for U.S. small-cap stocks. The thematic, momentum-driven market of recent years is giving way to a more selective environment where disciplined investing will be crucial. Our small-cap strategy is well-positioned for this shift, with companies showing high returns on invested capital (ROIC), strong profit margins and clean balance sheets. Forecasted double-digit earnings growth and attractive valuations further support our confidence. As we enter 2025, we remain focused on identifying high-quality businesses, ensuring our strategy is prepared for both the opportunities and challenges ahead.
Portfolio Increases
- Maximus, Installed Building Products and FTI Consulting: Increased stakes in these names to capitalize on attractive valuations and long-term growth potential.
Portfolio Reductions
- Reduced exposure in Marriott Vacations Worldwide and Houlihan Lokey due to valuation concerns.
- Took profits in well-performing stocks like StoneX, Shake Shack, Hamilton Lane, Globus Medical, Primoris Services, Qualys, Grand Canyon Education and Planet Fitness while maintaining long-term confidence in these holdings.
Divestitures
- Envestnet: Sold after Bain Capital’s acquisition at a premium.
- MarketAxess: Exited due to slowing growth and rising competitive pressures from TradeWeb.
- Fox Factory: Divested following operational missteps and balance sheet concerns after the Marucci Sports acquisition.
Outlook
The outlook for 2025 presents a mix of opportunities and risks driven by U.S. political developments and global economic dynamics. While President Trump’s election suggests a business-friendly environment with lower taxes and deregulation, potential tariffs and strict immigration policies could reignite inflation. These conflicting policies may disrupt the Federal Reserve’s easing cycle, possibly halting interest rate cuts and tightening financial conditions. The newly proposed DOGE department’s aggressive budget cuts could have deflationary effects, further adding complexity to market expectations. The cumulative impact of these policies could lead to significant market volatility.
Geopolitical uncertainty also looms, with Trump’s agenda potentially influencing global conflicts and alliances. Historically, geopolitical events have had minimal long-term effects on U.S. equities, but short-term volatility may increase. Combined with policy shifts and heavy rhetoric, investors should brace for market swings in 2025.
Despite these uncertainties, the U.S. economy remains resilient. Strong corporate balance sheets, healthy consumer finances and steady capital expenditures contribute to sustained economic growth. The ongoing AI boom may further support productivity gains. However, the trajectory of interest rates remains a key risk. The direction and pace of rate changes could significantly affect consumer and business sectors, making it difficult to predict how markets will respond. Corporate earnings are expected to grow modestly in 2025, although elevated valuation multiples could limit equity market gains. After two years of strong stock performance outpacing earnings growth, future returns will likely depend on companies meeting high earnings expectations. This environment demands a focus on fundamentals and valuation discipline.
We believe company-specific fundamentals will drive performance in 2025, especially for U.S. small-cap stocks. The thematic, momentum-driven market of recent years is giving way to a more selective environment where disciplined investing will be crucial. Our small-cap strategy is well-positioned for this shift, with companies showing high returns on invested capital (ROIC), strong profit margins and clean balance sheets. Forecasted double-digit earnings growth and attractive valuations further support our confidence. As we enter 2025, we remain focused on identifying high-quality businesses, ensuring our strategy is prepared for both the opportunities and challenges ahead.
Greater China Growth Strategy

Investment Performance (%)
The following table shows the investment performance results of the Van Berkom Golden Dragon Greater China Growth Composite (in U.S. dollars), compared to the MSCI China and the MSCI Golden Dragon Small Cap Indices (as at December 31, 2024).
Returns are calculated using the time-weighted method and presented gross of management and trustee fees and withholding taxes. Returns are annualized for periods longer than 12 months.
* Note : December 31, 2011
Portfolio Positioning
Our portfolio remains well-positioned with companies demonstrating strong double-digit earnings growth, despite market-driven multiple contractions in Chinese equities over the past two years. A prime example is Yum China, one of our largest holdings, which delivered a 15% return in 2024. Several portfolio holdings have also experienced positive multiple re-ratings. Geely, for instance, delivered an impressive 78% return in 2024, highlighting the growing recognition of mid-cap opportunities in the market. This performance aligns with our investment strategy focused on underappreciated non-large-cap stocks that are poised for further appreciation in 2025.
New portfolio additions in 2024 have also performed strongly, underscoring the effectiveness of our research process. This mirrors the market environment of 2017 when initial gains were concentrated in large-cap stocks, but mid-cap names soon outpaced them. Historically, our strategy has thrived in similar conditions. In 2017, we initially lagged the benchmark by 20%, only to outperform significantly over the following two years as mid-cap holdings gained investor attention through strong growth and execution.
Looking ahead to 2025, we expect a stock-picker’s market, favouring companies with solid fundamentals and disciplined capital allocation. Our portfolio companies continue to lead in corporate governance, prioritizing shareholder returns and capital efficiency. Dividend payments and share buybacks are projected to contribute a 6–8% return, excluding additional gains from earnings growth.
By the end of the quarter, the top 10 holdings accounted for 40% of the portfolio, reflecting our conviction in high-performing businesses. We remain confident that our balanced approach, blending growth and value within overlooked segments, will drive performance in the coming year.
Our portfolio’s top five contributors significantly enhanced returns this quarter:
- Geely (+22.0%), driven by strong sales and expanding profit margins.
- Grab (+24.0%) surged on fintech growth and market dominance in Southeast Asia.
- com (+10.0%) benefited from rising Chinese travel demand.
- Sunny Optical (+20.0%) gained on smartphone and automotive lens sales.
- Mediatek (+16.0%) advanced through market share gains and partnerships with Nvidia.
Our portfolio’s bottom five detractors reduced our overall performance this quarter:
- China Overseas Property Management (-17.0%) declined due to weak stimulus details despite stable fundamentals.
- Kuaishou (-25.0%) and New Oriental (-21.0%) saw multiple contractions after lowering 2025 growth expectations.
- ZTO Express (-23.0%) struggled with pricing pressures amid slow sector consolidation.
- Merida (-36.0%) fell on concerns over spring 2025 demand for high-end e-bikes.
Portfolio Changes
During the quarter, we strategically adjusted the portfolio to enhance exposure to AI-driven growth and capitalize on market opportunities in the semiconductor and Chinese tech sectors. Key portfolio changes included the following.
Divestitures
- ESR: Fully exited after a privatization announcement, reallocating proceeds to fund semiconductor purchases.
- Sercomm and Novatek: Sold to fund investments in TSMC and Tokyo Electron, which offer better quality at similar valuations within the sector.
Portfolio Increases
- Meituan, Alibaba and Tencent (MAT): Increased positions due to strong AI growth potential. Meituan is advancing in automated drone deliveries, while Alibaba and Tencent are expanding enterprise and consumer cloud services. All three offer high free cash flow yields and growing buybacks. In addition, Tencent has a diverse ecosystem in social media, gaming, e-commerce and AI. Strategic investments in global tech firms and resilience through regulatory challenges make it attractive at 13x P/E.
Portfolio Reductions
- Bank of China Aviation, Geely, Sunny Optical, Trip.com, Novatek and Weichai: Trimmed to lock in profits and reallocate to higher-quality opportunities.
New Additions
- TSMC, Mediatek and Tokyo Electron: Added to increase AI exposure at attractive valuations. These semiconductor leaders are well-positioned for growth in AI applications, EVs, smartphones and consumer electronics, trading at 15x P/E—cheaper than US peers.
Outlook
We expect Asia’s upward market momentum to continue in 2025 despite global macroeconomic uncertainty, particularly surrounding potential policy shifts under a Trump administration. Ongoing policy support, rising shareholder returns and solid corporate fundamentals in the region are set to offset external pressures. Current consensus projects only 10% growth in Asia for 2025, creating a favourable environment for stock-pickers, similar to the 2017 Chinese market rally. In that period, large-cap stocks led initially, but mid-cap stocks soon outperformed as their stronger growth rates gained investor attention. We anticipate a similar trajectory in 2025, with mid-cap companies poised for significant returns.
Further stimulus measures in China are expected to counterbalance the impact of a strong U.S. dollar and possible trade tensions with the U.S. There is speculation that Trump may pursue a trade agreement with China after leveraging tariff threats to strengthen his position. Domestically, China’s stimulus efforts are beginning to show results. Consumption is rebounding in Shanghai’s malls and restaurants, supported by targeted government-issued consumption vouchers. We believe that these pilot programs will expand nationwide, encouraging sustainable consumer spending. This shift toward higher-quality consumption—such as premium home appliances, maternity products and fresh produce in third and fourth-tier cities—represents a more resilient growth driver compared to traditional infrastructure spending.
The Chinese government has pledged additional funding to support the stock market if current measures prove insufficient. This commitment should further stabilize markets and support corporate earnings. As stimulus policies take effect, we expect deflation concerns to ease and economic data to improve throughout the year.
Our investment strategy remains focused on high-quality companies with strong management teams trading at attractive valuations. We prioritize firms that offer consistent shareholder returns through dividends and share buybacks, providing steady income as we wait for market revaluation. Currently, the portfolio trades at a compelling 13x price-to-earnings ratio with projected 20% earnings growth and a 31% discount to its discounted cash flow valuation.
Looking ahead, we are confident that Asia’s resilient fundamentals, combined with supportive government policies and disciplined stock selection, will drive positive returns in 2025. Our strategy positions us well to capture growth opportunities while managing risks in an evolving global landscape.
Portfolio Increases
- Meituan, Alibaba and Tencent (MAT): Increased positions due to strong AI growth potential. Meituan is advancing in automated drone deliveries, while Alibaba and Tencent are expanding enterprise and consumer cloud services. All three offer high free cash flow yields and growing buybacks. In addition, Tencent has a diverse ecosystem in social media, gaming, e-commerce and AI. Strategic investments in global tech firms and resilience through regulatory challenges make it attractive at 13x P/E.
Portfolio Reductions
- Bank of China Aviation, Geely, Sunny Optical, Trip.com, Novatek and Weichai: Trimmed to lock in profits and reallocate to higher-quality opportunities.
New Additions
- TSMC, Mediatek and Tokyo Electron: Added to increase AI exposure at attractive valuations. These semiconductor leaders are well-positioned for growth in AI applications, EVs, smartphones and consumer electronics, trading at 15x P/E—cheaper than US peers.
Outlook
We expect Asia’s upward market momentum to continue in 2025 despite global macroeconomic uncertainty, particularly surrounding potential policy shifts under a Trump administration. Ongoing policy support, rising shareholder returns and solid corporate fundamentals in the region are set to offset external pressures. Current consensus projects only 10% growth in Asia for 2025, creating a favourable environment for stock-pickers, similar to the 2017 Chinese market rally. In that period, large-cap stocks led initially, but mid-cap stocks soon outperformed as their stronger growth rates gained investor attention. We anticipate a similar trajectory in 2025, with mid-cap companies poised for significant returns.
Further stimulus measures in China are expected to counterbalance the impact of a strong U.S. dollar and possible trade tensions with the U.S. There is speculation that Trump may pursue a trade agreement with China after leveraging tariff threats to strengthen his position. Domestically, China’s stimulus efforts are beginning to show results. Consumption is rebounding in Shanghai’s malls and restaurants, supported by targeted government-issued consumption vouchers. We believe that these pilot programs will expand nationwide, encouraging sustainable consumer spending. This shift toward higher-quality consumption—such as premium home appliances, maternity products and fresh produce in third and fourth-tier cities—represents a more resilient growth driver compared to traditional infrastructure spending.
The Chinese government has pledged additional funding to support the stock market if current measures prove insufficient. This commitment should further stabilize markets and support corporate earnings. As stimulus policies take effect, we expect deflation concerns to ease and economic data to improve throughout the year.
Our investment strategy remains focused on high-quality companies with strong management teams trading at attractive valuations. We prioritize firms that offer consistent shareholder returns through dividends and share buybacks, providing steady income as we wait for market revaluation. Currently, the portfolio trades at a compelling 13x price-to-earnings ratio with projected 20% earnings growth and a 31% discount to its discounted cash flow valuation.
Looking ahead, we are confident that Asia’s resilient fundamentals, combined with supportive government policies and disciplined stock selection, will drive positive returns in 2025. Our strategy positions us well to capture growth opportunities while managing risks in an evolving global landscape.
U.S. Small-Mid Cap Equity Strategy

Investment Performance (%)
The following table shows the investment performance of the Van Berkom U.S. Small-Mid Cap Composite (in U.S. dollars), compared to the Russell 2500 Small Cap Index (as at December 31, 2024).
Returns are calculated using the time-weighted method and presented gross of management and trustee fees and withholding taxes. Returns are annualized for periods longer than 12 months.
* Note : September 30, 2017
Portfolio Positioning
In the fourth quarter, the portfolio closely mirrored the index, with gains in Q3 and a steady Q4 unable to offset a weak start to the year. Both the SMID and Small Cap funds underperformed in 2024 despite a strong 2023. However, the second half of the year marked a notable recovery, supported by the Federal Reserve’s 100 basis point rate cuts. Looking ahead to 2025, we anticipate that macroeconomic themes will have less impact, creating a favourable environment for our bottom-up investment strategy.
Portfolio allocation and stock selection were largely balanced in Q4, with allocation outperforming by a modest 2–3 basis points. Positive contributors included our zero exposure to the underperforming Materials and Real Estate sectors and overweight positions in Financials and Information Technology (IT). However, an overweight in Health Care was the most significant drag, compounded by underweight exposure in Energy and an overweight in Consumer Discretionary.
Sector performance in Q4 was led by IT and Financials, followed by Energy. Conversely, Health Care lagged due to concerns over Medicare and Medicaid funding, while Materials and Real Estate also underperformed. For the full year, Utilities were the standout sector, delivering nearly 30% returns, with Financials up 21% and IT, Industrials, and Consumer Staples posting mid-teen gains. Materials and Health Care were the weakest sectors, returning less than 1% and 3%, respectively.
Financials remained the portfolio’s largest sector weight at 21.7%, followed by Consumer Discretionary at 18.8%. We maintained our long-standing zero exposure to Energy, Materials, and Real Estate. A significant shift in 2024 was the increased allocation to Industrials, addressing a long-held underweight position. The Q4 sell-off in Industrials presented a compelling opportunity as valuations became more attractive for high-quality, growth-sustainable companies. This strategic reallocation was funded primarily by reducing exposure to large, rate-sensitive Consumer Discretionary holdings throughout the year.
Our disciplined approach to sector positioning and valuation sensitivity remains central to navigating market volatility and capturing long-term growth opportunities.
Substantial contributors to our Q4 performance include these names:
- Five9 (+52%) rebounded strongly in Q4, as management addressed profitability concerns and clarified its AI strategy.
- Shake Shack (+25.8%), due to a smooth CEO transition, margin recovery and consistent growth in new locations.
- EPAM Systems (+23.6%), driven by stabilizing demand for digital transformation services and strategic workforce shifts away from Eastern Europe.
Substantial detractors to our Q4 performance include these stocks:
- Installed Building Products (-29.0%), due to negative market sentiment toward housing stocks amid inflation concerns, despite strong fundamentals.
- Pennant Group (-25.0%), following a large equity raise and broader healthcare sector pressures.
Portfolio Changes
During the fourth quarter, the portfolio underwent several strategic adjustments to optimize performance and align with market conditions. Below are the key portfolio changes and the rationale behind each decision.
Reduced Positions
- Installed Building Products (IBP) was reduced following a 29% decline driven by market sentiment toward housing stocks, despite solid long-term fundamentals.
- Pennant Group (PNTG) was trimmed after a 25% decline due to an equity raise and healthcare policy concerns, though long-term growth remains promising.
New Additions
- EPAM Systems Inc. (EPAM): Added due to stabilizing demand for digital transformation services and significant long-term growth potential in AI and cloud consulting.
- Willscot Mobile Mini Holdings Corp. (WSC): Initiated a position based on strong market leadership in modular space solutions and potential for growth as non-residential construction stabilizes.
- SPX Technologies (SPXC): Added after a strategic restructuring positioned the company for growth in HVAC and infrastructure-driven markets.
- Entegris Inc. (ENTG): Acquired due to its leading role in semiconductor materials and expected revenue recovery in 2025.
Divestitures
- Sotera Health (SHC): exited due to disappointing growth targets, high leverage from litigation costs and inconsistent execution.
- Qualys Inc. (QLYS): sold after exceeding return expectations and concerns over inconsistent growth in SMB markets.
- Envestnet Inc. (ENV): divested following its acquisition by Bain Capital, locking in a 27% annual return.
- Brunswick Corp. (BC): sold due to challenges in discretionary spending on large-ticket items amid higher interest rates.
- Fox Factory Holding Corp. (FOXF): exited due to poor financial management, excessive leverage from acquisitions and weakening demand.
Outlook
Looking ahead to 2025, market dynamics are expected to shift as several key factors come into play. Persistent inflation pressures and rising interest rate expectations make the outlook for high-growth stocks less favourable, creating opportunities for more balanced portfolios. The Federal Reserve’s more cautious stance on rate cuts signals a slower and shallower reduction path, with cuts likely delayed until mid-2025. Median interest rate projections for September 2025 and 2026 have been revised upward, reflecting ongoing concerns about inflation. This shift suggests that markets will need to adjust to the reality of prolonged higher interest rates, impacting investment strategies and asset valuations.
On the policy front, the anticipated renewal of the Tax Cuts and Jobs Act under President-elect Trump could bolster employment and economic activity. However, proposed protective trade policies and potential tariffs pose risks to global trade. For Canada, the impact may be limited due to its role as a key supplier of essential resources like oil, aluminum and uranium. Additionally, the proposed Department of Government Efficiency (DOGE) introduces uncertainty, particularly for sectors reliant on government spending, including the Environmental Protection Agency, HUD, SEC and the Department of Education.
In this environment, core investment strategies focused on quality and sustainable growth remain well-suited. Small and SMID-cap stocks with modest valuations are projected to offer steady returns in the 5–10% range for 2025. However, macro risks persist, particularly regarding trade tensions and the unpredictable impact of DOGE’s cost-cutting initiatives on government contractors.
While market sensitivity to interest rates will persist, a more stable economic backdrop supports companies capable of managing higher borrowing costs. Domestically focused businesses are likely to benefit from pro-business policies and a strong labour market. However, uncertainty surrounding the new administration’s policy direction may lead to initial market volatility. Overall, a cautious yet opportunistic approach that favours diversified exposure to resilient sectors appears prudent for navigating 2025.
New Additions
- EPAM Systems Inc. (EPAM): Added due to stabilizing demand for digital transformation services and significant long-term growth potential in AI and cloud consulting.
- Willscot Mobile Mini Holdings Corp. (WSC): Initiated a position based on strong market leadership in modular space solutions and potential for growth as non-residential construction stabilizes.
- SPX Technologies (SPXC): Added after a strategic restructuring positioned the company for growth in HVAC and infrastructure-driven markets.
- Entegris Inc. (ENTG): Acquired due to its leading role in semiconductor materials and expected revenue recovery in 2025.
Divestitures
- Sotera Health (SHC): exited due to disappointing growth targets, high leverage from litigation costs and inconsistent execution.
- Qualys Inc. (QLYS): sold after exceeding return expectations and concerns over inconsistent growth in SMB markets.
- Envestnet Inc. (ENV): divested following its acquisition by Bain Capital, locking in a 27% annual return.
- Brunswick Corp. (BC): sold due to challenges in discretionary spending on large-ticket items amid higher interest rates.
- Fox Factory Holding Corp. (FOXF): exited due to poor financial management, excessive leverage from acquisitions and weakening demand.
Outlook
Looking ahead to 2025, market dynamics are expected to shift as several key factors come into play. Persistent inflation pressures and rising interest rate expectations make the outlook for high-growth stocks less favourable, creating opportunities for more balanced portfolios. The Federal Reserve’s more cautious stance on rate cuts signals a slower and shallower reduction path, with cuts likely delayed until mid-2025. Median interest rate projections for September 2025 and 2026 have been revised upward, reflecting ongoing concerns about inflation. This shift suggests that markets will need to adjust to the reality of prolonged higher interest rates, impacting investment strategies and asset valuations.
On the policy front, the anticipated renewal of the Tax Cuts and Jobs Act under President-elect Trump could bolster employment and economic activity. However, proposed protective trade policies and potential tariffs pose risks to global trade. For Canada, the impact may be limited due to its role as a key supplier of essential resources like oil, aluminum and uranium. Additionally, the proposed Department of Government Efficiency (DOGE) introduces uncertainty, particularly for sectors reliant on government spending, including the Environmental Protection Agency, HUD, SEC and the Department of Education.
In this environment, core investment strategies focused on quality and sustainable growth remain well-suited. Small and SMID-cap stocks with modest valuations are projected to offer steady returns in the 5–10% range for 2025. However, macro risks persist, particularly regarding trade tensions and the unpredictable impact of DOGE’s cost-cutting initiatives on government contractors.
While market sensitivity to interest rates will persist, a more stable economic backdrop supports companies capable of managing higher borrowing costs. Domestically focused businesses are likely to benefit from pro-business policies and a strong labour market. However, uncertainty surrounding the new administration’s policy direction may lead to initial market volatility. Overall, a cautious yet opportunistic approach that favours diversified exposure to resilient sectors appears prudent for navigating 2025.
Global Small Cap Equity Strategy

Investment Performance (%)
The following table shows the investment performance of the Van Berkom Global Small Cap Fund, compared to the MSCI ACWI Small Cap Index in CAD (as at December 31, 2024).
Returns are calculated using the time-weighted method and presented gross of management and trustee fees and withholding taxes. Returns are annualized for periods longer than 12 months.
* Note : July 31, 2022
Portfolio Positioning
Our U.S. holdings entered the election cycle well-positioned to benefit from a more domestically focused government agenda, with significant exposure to U.S. industrials, financials and healthcare. As a result, this quarter has been tremendous. Additionally, our Canadian holdings, which generate most of their revenue from the U.S., also reaped the benefits. Together, our North American allocation delivered a strong return of 12.0% this quarter.
However, what benefits America is often perceived as a cost to others. Concerns over trade tariffs, technology embargoes and rising inflation have dampened sentiment in other regions. Our Asia holdings declined by 11.3% this quarter, while European holdings fell by 3.4%. Despite these challenges, the global portfolio achieved a net positive result, with the fourth quarter generating a return of 5.0%, outperforming the benchmark return of 3.1%.
In Q4 2024, key portfolio performers included these names:
- MDA Space (+69.9%): MDA’s strong Q3 results showed 78% satellite revenue growth and a 60% EBITDA increase. Management expects 20%+ annual revenue growth, driven by strong RFP activity and anticipated contracts in the next 18 months. Despite a 156.3% share price rise in 2024, further upside remains, although capital has been partially reallocated after this year’s rapid gains.
- Five9 (+50.6%): Following a weak Q2, Five9’s strong Q3 exceeded expectations, restoring management credibility. Growth remains below targets but is stabilizing, positioning the company to outperform moving forward.
- Victory Capital (26.6%): The Amundi US acquisition is set to boost EBITDA and free cash flow by 50-60%, reduce leverage and add a 15-year international distribution agreement. Victory is open to further acquisitions post-deal, benefiting from growing interest in asset management divestitures.
In Q4 2024, key detractors included these stocks:
- SMS (-29.3%): Operating income missed expectations, declining 41% YoY to 574m yen vs. consensus of 985m yen, due to increased hiring and advertising costs. While management communicated the temporary impact, the scale of the decline was unexpected. Despite this setback, we support the strategy to invest in sales and advertising to drive future growth.
- M&A Research (-33.8%): The correction reflects a revised FY 2025 outlook, lowering advisor hiring targets from 500 to 400-450, resetting the growth trajectory. “Advisor count” directly impacts revenue growth, so we remain cautious about management’s ability to address core challenges. The position has been reduced and placed under observation.
- Norva24 (-12.6%): Weakness stems from ongoing challenges in Germany and potential acquisition blocks by Norwegian regulators. Organic growth was 8%, and adj. EBITDA rose 13% YoY to 221m NOK, aligning with consensus. German adj. EBITA fell 25% YoY, dragging group results. Management aims to turn around the German unit, leveraging prior success with similar issues in Denmark.
Portfolio Changes
In the recent quarter, we added five new names:
- Ferretti: For this luxury yacht manufacturer with renowned brands like Riva, investments in shipyard capacity and backlog execution are driving high-margin sales growth. The company is debt-free, trades at 3.4x forward EBITDA and has nearly two years of backlog. Free cash flow supports a growing dividend.
- SPX Technologies is a producer of niche industrial products in non-discretionary verticals like HVAC and detection/measurement. Its asset-light model enables organic growth and tuck-in acquisitions, positioning the company to benefit from U.S. industrial reshoring and data center demand.
- Atour is China’s largest upper midscale hotel chain (10x forward EBITDA). Its dual model combines a fast-growing franchise hotel business (20% annual growth) with a retail bedding brand, a leader in online shopping channels.
- 5N Plus is a Montreal-based producer of specialty semiconductors and materials for sectors like renewable energy, aerospace and medical applications. Trading at 9x EV/EBITDA, it is poised to benefit from U.S. solar energy development.
- Willscot is a provider of temporary modular space and storage solutions in North America, serving 85K+ customers across 14 industries. Despite challenges in non-residential construction, it trades below intrinsic value with long-term growth potential.
We exited VAC and CIGI due to relative opportunities and stewardship considerations.
Outlook
With six of the G7 countries electing new governments in 2025, domestic agendas are increasingly shaping policy across key markets, focusing on immigration, inflation and housing affordability. This shift builds on recent trends where domestic politics and geopolitics play a growing role in discussions with portfolio company management. While business fundamentals remain our primary focus, we are paying closer attention to regional political developments, particularly in areas like supply chain security, tariffs and labour policies.
In the U.S., the incoming Trump administration’s “America First” approach is prompting companies to adapt to anticipated policies. While the prospects of lower taxes, deregulation and a business-friendly environment bode well for equities, potential tariffs and stricter immigration enforcement could stoke inflation and disrupt the Federal Reserve’s easing cycle. These contradictory policies, combined with bombastic rhetoric, may create significant market volatility both domestically and globally. Meanwhile, proposals like the new Department of Government Efficiency (DOGE) could reduce federal spending, driving deflationary pressure and impacting interest rate trajectories.
In Europe, Germany remains a weak link, having been in recession for two years. Conversations with German corporate leaders suggest the upcoming election could be pivotal. A centre-right coalition led by the Christian Democratic Party could enact reforms to cut bureaucracy, ease fiscal constraints and increase infrastructure and defence spending. A resolution to the Ukraine conflict could further boost the region with reconstruction activity. In the U.K., the new Labour government’s increased public spending, especially on affordable housing, provides long-term opportunities for housing-related companies. However, rising costs, including National Insurance and wages, are pressuring corporate margins. Retailers report continued consumer strain, but much of the negative sentiment appears priced into the market, revealing attractive investment opportunities.
In Japan, the spring 2025 wage negotiations will shape the Bank of Japan’s monetary policy. Governor Kazuo Ueda has hinted at further rate hikes as wages rise amid persistent labour shortages. The aging population, with all baby boomers reaching 75 or older in 2025, will exacerbate these shortages, emphasizing the need for productivity-boosting digital solutions and human capital management. Corporate governance reforms continue to drive shareholder returns through record share buybacks and dividends. Additionally, M&A activity is set to accelerate as companies streamline operations, address labour challenges, and enhance efficiency.
Overall, our portfolio companies—regional champions with strong margins, high returns and robust balance sheets—are well-positioned to benefit from supportive domestic policies, easing inflation and an improved interest rate environment.
We exited VAC and CIGI due to relative opportunities and stewardship considerations.
Outlook
With six of the G7 countries electing new governments in 2025, domestic agendas are increasingly shaping policy across key markets, focusing on immigration, inflation and housing affordability. This shift builds on recent trends where domestic politics and geopolitics play a growing role in discussions with portfolio company management. While business fundamentals remain our primary focus, we are paying closer attention to regional political developments, particularly in areas like supply chain security, tariffs and labour policies.
In the U.S., the incoming Trump administration’s “America First” approach is prompting companies to adapt to anticipated policies. While the prospects of lower taxes, deregulation and a business-friendly environment bode well for equities, potential tariffs and stricter immigration enforcement could stoke inflation and disrupt the Federal Reserve’s easing cycle. These contradictory policies, combined with bombastic rhetoric, may create significant market volatility both domestically and globally. Meanwhile, proposals like the new Department of Government Efficiency (DOGE) could reduce federal spending, driving deflationary pressure and impacting interest rate trajectories.
In Europe, Germany remains a weak link, having been in recession for two years. Conversations with German corporate leaders suggest the upcoming election could be pivotal. A centre-right coalition led by the Christian Democratic Party could enact reforms to cut bureaucracy, ease fiscal constraints and increase infrastructure and defence spending. A resolution to the Ukraine conflict could further boost the region with reconstruction activity. In the U.K., the new Labour government’s increased public spending, especially on affordable housing, provides long-term opportunities for housing-related companies. However, rising costs, including National Insurance and wages, are pressuring corporate margins. Retailers report continued consumer strain, but much of the negative sentiment appears priced into the market, revealing attractive investment opportunities.
In Japan, the spring 2025 wage negotiations will shape the Bank of Japan’s monetary policy. Governor Kazuo Ueda has hinted at further rate hikes as wages rise amid persistent labour shortages. The aging population, with all baby boomers reaching 75 or older in 2025, will exacerbate these shortages, emphasizing the need for productivity-boosting digital solutions and human capital management. Corporate governance reforms continue to drive shareholder returns through record share buybacks and dividends. Additionally, M&A activity is set to accelerate as companies streamline operations, address labour challenges, and enhance efficiency.
Overall, our portfolio companies—regional champions with strong margins, high returns and robust balance sheets—are well-positioned to benefit from supportive domestic policies, easing inflation and an improved interest rate environment.