Market Commentary
For the second quarter of 2025, the Caldwell North American Fund (CNA or Fund) gained 2.6% versus a gain of 6.9% 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 Information Technology, Communication Services, and Financials were relative outperformers, whereas Healthcare, Energy, and Real Estate underperformed.
Portfolio Commentary
Top contributors to the Fund’s performance in the second quarter of 2025 were Microsoft (MSFT), Stantec (STN), and Element Fleet Management (EFN)2. MSFT performed well throughout the quarter following strong earnings. Demand continues to outpace capacity in both its AI and Azure businesses, driven by rapid enterprise adoption of cloud infrastructure and generative AI solutions. This supply-demand imbalance is fueling accelerating growth, with strong forward momentum as customers scale usage and the company expands its infrastructure to meet rising demand. STN delivered strong performance as it benefits from a robust demand backdrop and a healthy project pipeline. The rerating is further supported by expectations for increased mergers and acquisitions activity, backed by a strengthening balance sheet. EFN rerated higher as the company delivered a constructive outlook supported by a growing backlog, stable demand, and disciplined expense control. Management reiterated full-year guidance and highlighted potential upside from expected U.S. tax legislation, which could meaningfully boost syndication revenue in the second half of the year. Investors were also encouraged by the expansion of its digital platform and early signs that originations are set to accelerate, reinforcing confidence in its growth trajectory.
During the second 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 June 30, 2025:
Caldwell North American Fund Series F: 1 Year: 9.7%, 3 year: 13.3%, 5 year: 11.9%, 10 year: 7.4%, Since Inception (August 8, 2014): 7.5%.
50% S&P/TSX Composite Total Return Index and 50% S&P500 Total Return Index: 1 Year: 20.6%, 3 year: 19.1%, 5 year: 16.0%, 10 year: 12.2%, Since Inception (August 8, 2014): 12.2%.
All data is as of March 31, 2025 sourced from Capital IQ, unless otherwise specified.
2First purchased: MSFT 2/24/2025, STN 9/18/2024, EFN 2/2/2021.
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: July 18, 2025.