Market Commentary
For the third quarter of 2026, the Caldwell North American Fund (CNA or Fund) returned -0.2% versus 2.0% for the Fund’s benchmark, which comprises an equal blend of the S&P/TSX Composite Total Return Index and the S&P 500 Total Return Index1. From a sector standpoint, Materials, Information Technology, Health Care were the strongest benchmark sectors, while Industrials, Real Estate, Utilities were the weakest.
Portfolio Commentary
The top contributors during the third quarter were Thermo Fisher Scientific (TMO), Cenovus Energy (CVE) and Microsoft (MSFT), while the largest detractors were ATS Corporation (ATS), L3Harris Technologies (LHX) and RB Global (RBA)2. TMO benefited from improving expectations for a recovery in biopharmaceutical research spending and demand for life sciences instruments and services. Its diversified revenue base, recurring consumables exposure and potential for operating leverage as end-market demand recovers supported investor confidence in future earnings growth. CVE benefited from elevated crude oil prices and favourable refining market conditions, supported by geopolitical uncertainty and constrained global energy supply. The company’s integrated upstream and downstream operations, improving production efficiency and focus on debt reduction and shareholder returns reinforced expectations for strong free cash flow generation. MSFT benefited from continued growth in its Azure cloud platform, supported by accelerating enterprise adoption of artificial intelligence and sustained demand for computing infrastructure. The company’s expanding AI product portfolio, recurring enterprise software revenues and substantial investment in data centre capacity supported expectations for durable long-term earnings growth. ATS detracted as investors remained cautious about the outlook for automation equipment spending amid uncertainty surrounding customer capital expenditure decisions and project timing. Exposure to cyclical industrial markets, alongside concerns about order conversion and margin recovery, weighed on expectations for near-term earnings growth. LHX detracted amid concerns surrounding defence program execution, profitability and the timing of government contract awards. Despite supportive long-term defence spending trends, uncertainty around program margins and the conversion of its backlog into earnings and free cash flow weighed on investor sentiment. RBA detracted as investors reassessed its near-term growth outlook amid softer equipment transaction volumes and uncertainty surrounding construction and industrial end markets. Concerns about the pace of marketplace growth, operating leverage and the sustainability of auction activity weighed on sentiment toward the shares.
The Fund held a 3.4% cash weighting at quarter-end. While we remain mindful of the macroeconomic environment, the Fund employs a bottom-up investment approach designed to identify attractive company-specific opportunities. We continue to emphasize disciplined portfolio construction, fundamental catalysts and risk management with the objective of delivering compelling long-term risk-adjusted returns for investors.
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 September 30, 2026:
Caldwell North American Fund Series F: 1 Year: -3.5%, 3 year: 9.3%, 5 year: 7.0%, 10 year: 6.9%, Since Inception (August 8, 2014): 6.7%.
50% S&P/TSX Composite Total Return Index and 50% S&P500 Total Return Index: 1 Year: 19.3%, 3 year: 25.2%, 5 year: 15.9%, 10 year: 14.4%, Since Inception (August 8, 2014): 13.5%.
All data is as of September 30, 2026 sourced from Capital IQ, unless otherwise specified.
2First purchased: TMO 8/7/2024, CVE 8/22/2025, MSFT 2/24/2025.
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: October 19, 2026.