Market Commentary
For the first quarter of 2025, the Caldwell North American Fund (CNA or Fund) declined -2.5% versus a decline of -1.3% for the Fund’s benchmark, which comprises an equal blend of the S&P 500 Total Return Index and the S&P/TSX Composite Total Return Index1. From a sector standpoint Materials, Healthcare, and Utilities were relative outperformers, whereas Information Technology, Consumer Discretionary, and Communication Services underperformed.
Portfolio Commentary
Top contributors to the Fund’s performance in the first quarter of 2025 were Boston Scientific (BSX), Visa (V), and Suncor Energy (SU)2. BSX sustained its strong performance into this year as it continued to deliver strong quarterly results. Its U.S. launch of Farapulse, a Pulsed Field Ablation (PFA) system that uses electric fields to precisely target and ablate heart tissue to treat atrial fibrillation—a common heart rhythm disorder marked by rapid and irregular beating—is off to a strong start, with adoption exceeding expectations, and traction in Europe has improved along with easing supply chain constraints. The company remains on track toward its annual margin expansion targets, aided by a solid pipeline of higher-margin product launches over the next 1-3 years. In addition to strong organic growth, BSX supplements its efforts with continued mergers and acquisitions and investments in promising technology through an internal venture capital arm. Overall, we believe the company should continue to outgrow its peers while improving profitability over time. V performed well as the company experienced continued modest growth in spending volume, aided by increased international travel that drove a further rebound in cross-border transaction volume, as well as a strong U.S. dollar. SU held up well as the company has made meaningful structural improvements over the past two years, lowering its breakeven oil price to the mid-$40s per barrel through enhanced operational efficiency and disciplined capital allocation. With net debt reduced by about half, the company now achieves full free cash flow coverage—able to fund both dividends and capital spending— at a West Texas Intermediate (WTI) oil price of approximately U.S. $50 per barrel. This strengthened financial position gives it the flexibility to act as a predator in the current volatile market, able to pursue opportunistic mergers and acquisitions and other strategic initiatives without having to rely on external financing.
During the first quarter of 2025, the Fund did not initiate any new positions.
Looking Forward
Inflation, interest rates, tariffs and the state of the economy continue to be the most prevalent themes in 2025. Macroeconomic forces are still the most dominant factors driving the markets. If inflation remains at a manageable level, central banks may be able to orchestrate a soft landing for the economy, avoiding a typical recession. However, if inflation elevates to undesirable levels again, a harder landing may be necessary where interest rates strain consumer spending, investments, and corporate profits, ultimately resulting in a classic recession with increased unemployment. While economic uncertainty is a predominant risk in the markets today, we remind investors that one of the Fund’s investment principles is to protect capital by seeking reasonable valuations. To that end, we think the Fund’s value tilt positions it well for the uncertain environment. History has taught us that crisis creates new opportunities and for those investors with multi-year investment horizons, we will continue to manage portfolios based on our investment principles of protecting and growing our investors’ capital through discounted valuations, strong balance sheets, good management teams and attractive business environments.
1Series F, total return CAD terms
Standard performance as at March 31, 2025:
Caldwell North American Fund Series F: 1 Year: 9.3%, 3 year: 10.3%, 5 year: 14.0%, 10 year: 6.9%, Since Inception (August 8, 2014): 7.4%.
50% S&P/TSX Composite Total Return Index and 50% S&P500 Total Return Index: 1 Year: 15.6%, 3 year: 11.1%, 5 year: 17.9%, 10 year: 11.3%, Since Inception (August 8, 2014): 11.8%.
All data is as of March 31, 2025 sourced from Capital IQ, unless otherwise specified.
2First purchased: BSX 2/5/2021, V 12/29/2020, SU 2/4/2022.
The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Rates of returns, unless otherwise indicated, are the historical annual compounded returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.
Publication date: April 24, 2025.