Market Commentary
For the second quarter of 2026, the Caldwell North American Fund (CNA or Fund) returned 2.1% versus a gain of 12.0% 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 in Canadian markets, Financials, Consumer Staples and Health Care outperformed while Gold, Materials and Communications Services were relative underperformers. On the U.S. side, Industrials, Health Care and Financials were top performers while Communication Services, Energy and Consumer Discretionary were relative underperformers.
Portfolio Commentary
Top contributors to the Fund’s performance in the second quarter of 2026 were Royal Bank of Canada (RY), TFI International (TFII) and Amazon (AMZN)2. RY reported robust first quarter earnings that saw a significant decline in credit loss provisions (i.e. improving credit quality), strong net income growth and industry leading return on equity. RY has consistently led the peer group in structural profitability over the last four quarters. Over the long term, RBC’s dominant market position in Canadian retail banking and its highly scalable global wealth management franchise act as reliable engines for defensive earnings compounding which investors increasingly appreciate considering Canada’s softening economy. TFII reported a good quarter. Improving pricing in the trucking market built on the sequential improvement in revenue trends over the last four quarters. As excess trucking capacity continues to exit the market (supported by recent regulatory actions targeting illegal capacity), we expect continued improvement in revenue growth over the coming quarters. Long term, TFII is uniquely positioned to drive compounding shareholder value via its programmatic merger and acquisition (M&A) roll-up strategy, asset-light flexibility, and structural turnaround initiatives across its North American less-than-truckload (LTL) operations. Throughout the second quarter, management’s visibility into stabilizing LTL volumes and an industry-wide capacity rebalancing served as secondary catalysts to continuously support the stock’s valuation floor. AMZN reported very strong first quarter earnings with a significant beat in its cloud computing segment. Amazon’s AWS is the world’s largest cloud computing platform and is well positioned to benefit from the exponential increase in computing demand that will result from artificial intelligence (AI). The company also signed multi-year $100 billion cloud computing deal with Anthropic which further support the long-term growth outlook for the segment. In AMZN’s retail segment, ongoing investments aimed at improving distribution network efficiency have contributed to strong margin improvement while allowing AMZN to offer faster delivery times to more customers. We believe this virtuous cycle will continue to increase customer stickiness, drive volume growth and margin improvements over the mid to long term. Lastly, the company’s advertising business continues to scale (now a $70B/year run-rate business) which also provides margin tailwinds for the Retail segment.
During the second quarter of 2026, the Fund initiated positions in Pembina Pipeline Corp (PPL), AtkinsRealis Group (ATRL), Brookfield Renewable Corp. (BEPC), RB Global Inc. (RBA), Equinox Gold Corp. (EQX), Bank of America (BAC) and Broadcom (AVGO).
PPL is a major Western Canadian energy infrastructure provider operating an integrated network of transportation pipelines, storage terminals, and gas processing facilities. Its business model is backed by over 85% fee-based or take-or-pay contracts that insulate cash flows from direct commodity price volatility while capitalizing on expanding regional egress. Trading at an attractive discount to its historical enterprise-value-to-EBITDA multiple despite securing major near-term growth catalysts like the Cedar LNG project, the stock offers an exceptionally cheap entry point into high-quality defensive infrastructure. Furthermore, its resilient cash generation comfortably funds a reliable and growing dividend yield while leaving excess capital to steadily deleverage the balance sheet.
ATRL is a global professional services and project management firm specializing in nuclear power, clean energy, and sustainable infrastructure engineering. The company has successfully derisked its operational profile by phasing out high-risk, fixed-price construction contracts in favor of highly visible, collaborative engineering services. As the exclusive commercial owner of CANDU reactor technology, the business is a prime beneficiary of the global nuclear renaissance, and the surging clean energy demands of hyperscale data centers. At its current forward price-to-earnings multiple, the equity is significantly undervalued relative to pure-play global engineering peers, mispricing its rapid transition into a highly predictable free-cash-flow compounder.
BEPC operates as a globally diversified pure-play clean energy platform with a massive portfolio spanning hydroelectric, wind, utility-scale solar, and energy storage assets. The business captures multi-year secular tailwinds driven by corporate decarbonization mandates, global grid reindustrialization, and the immense power load required by artificial intelligence systems. Despite boasting irreplaceable, inflation-linked hydroelectric baseload assets that provide clear premium pricing power, the stock currently trades at a compressed price-to-funds-from-operations (P/FFO) multiple that underrepresents its massive internal growth pipeline. Backed by Brookfield’s vast global scale and institutional sponsorship, the platform maintains unmatched capital flexibility to execute highly accretive, large-scale clean energy asset acquisitions.
RBA operates a premier, omni-channel global marketplace providing transactional solutions, asset insights, and value-added services for commercial industrial equipment and automotive salvage. Its dominant global scale creates a highly liquid marketplace that benefits from powerful network effects, continuously attracting large institutional consignments by guaranteeing deep buyer pools. While the integration of its high-growth IAA automotive salvage segment structurally elevates the corporate margin profile, the stock’s current multiple fails to reflect this transformation, leaving it deeply discounted relative to its long-term earnings power. Robust structural free cash flow generation and counter-cyclical resilience across its core segments provide an excellent defensive cushion against near-term macroeconomic shifts.
RBA is an Americas-focused gold producer with a portfolio of operating mines and development assets across Canada, the United States, Mexico, and Central America. Its transformative, all-stock merger with Orla Mining elevates the company to senior producer status, establishing a clear, funded organic runway to scale annual production to over 1.9 million ounces. The concurrent ramp-up of its high-grade Canadian cornerstone assets, Greenstone and Valentine, significantly reduces historical jurisdictional risks while unlocking substantial operational synergies. Trading at a steep discount to net asset value (P/NAV) relative to its senior gold-producing peers, the stock presents a compelling re-rating opportunity as its unified cash flows fully support rapid balance sheet deleveraging.
BAC is a premier money-center financial institution providing a full suite of retail banking, asset management, and global market risk solutions. The firm commands an unrivaled, low-cost consumer deposit franchise that delivers a structural net interest margin advantage over smaller regional banking peers. Priced at an attractive multiple of both book value and forward earnings, the current equity valuation provides an excellent margin of safety that minimizes macro risk while maximizing the efficiency of its aggressive share buyback programs. Its well-balanced business mix stabilizes core profitability by offsetting cyclical lending contractions with steady, recurring fee revenues from Merrill Lynch wealth management and investment banking operations.
AVGO is a global technology leader that designs, develops, and supplies a diverse array of semiconductor devices and enterprise infrastructure software solutions. The company maintains an indispensable bottleneck position in the artificial intelligence infrastructure buildout, commanding a near-monopoly in high-end Ethernet switching chips and custom ASICs for hyperscale cloud data centers. This explosive hardware demand is paired with incredibly sticky, highly recurring revenues from its newly integrated VMware software platform, driving industry-leading operating margins. Given its unparalleled cash-flow conversion and aggressive dividend growth, the stock trades at a highly justified forward multiple that significantly undervalues its long-term compounding power relative to less-diversified semiconductor peers.
Looking Forward
The state of the economy, inflation, interest rates, tariffs, and geopolitical tensions remain central themes in the first half of 2026, with macroeconomic forces continuing to play a significant role in shaping market performance. At the same time, the global AI investment arms race has accelerated with the supply/demand balance worsening as AI usage explodes exponentially and countries increasingly realize the importance of being at the forefront of this shift. Rapid earnings growth and market capitalization expansion among AI-exposed companies have contributed to historically high levels of market concentration, particularly in U.S. equity markets. While there is no immediate evidence of a reversion, questions around the sustainability of current investment levels and the pace of monetization are likely to become increasingly important drivers of investor sentiment. From a macroeconomic perspective, a key risk remains the potential re-acceleration of inflation. Tariff actions and the Iran war increase the risk of higher input costs, supply-chain inefficiencies, and reduced pricing flexibility for businesses, which could ultimately be passed on to consumers. If inflation remains contained, central banks may still be able to achieve a soft landing, however recent Federal Reserve commentary hinted at a change in posture biased towards raising rates, with the market now pricing in a hike as soon as July 2026. More restrictive monetary policy may place pressure on consumer spending, corporate investment, and profit margins, and potentially resulting in a more pronounced economic slowdown and rising unemployment that more than offsets growth from AI investment.
While economic uncertainty remains elevated, we remind investors that one of the Fund’s core investment principles is capital protection through disciplined valuation. In this context, we believe the Fund’s value tilt and diversified positioning across sectors and business models leave it well-situated for a range of potential outcomes. History has shown that periods of heightened uncertainty often create opportunities for investors with multi-year investment horizons. Accordingly, we will continue to manage the portfolio in line with our investment principles, focusing on companies with attractive valuations, strong balance sheets, capable management teams, and durable business models that can compound value over time.
1Series F, total return CAD terms
Standard performance as at June 30, 2026:
Caldwell North American Fund Series F: 1 Year: -0.2%, 3 year: 8.7%, 5 year: 7.5%, 10 year: 7.6%, Since Inception (August 8, 2014): 6.8%.
50% S&P/TSX Composite Total Return Index and 50% S&P500 Total Return Index: 1 Year: 30.2%, 3 year: 23.6%, 5 year: 15.8%, 10 year: 14.8%, Since Inception (August 8, 2014): 13.6%.
All data is as of June 30, 2026 sourced from Capital IQ, unless otherwise specified.
2First purchased: RY 2/24/2025, TFII 12/1/2025, AMZN 4/27/2022.
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: July 15, 2026.