Portfolio Update

December 2025

Global equity markets have delivered a strong run over the past eleven months. As we approach year-end, major indices remain on track for a third consecutive year of double-digit gains. The S&P 500 is up 14.2% (total return in Canadian dollars), the MSCI ACWI +17.4%, the MSCI EAFE +23.5%, the MSCI Emerging Markets +25.7% and the S&P/TSX +30.0% year-to-date.

November saw a modest rise in volatility, reflecting shifts in interest-rate expectations and the reopening of the U.S. government following the longest federal shutdown in history. Investors closely monitored these developments as they assessed the potential impact on economic growth and capital markets.

Equity markets have exhibited remarkable resilience this year, driven by steady consumer demand, broadly accommodative policy and corporate earnings that have generally exceeded expectations. The magnitude of stock market returns over the past three years has been impressive, with the MSCI All Country World Index returning 19.6% annualized over the period, particularly given the macroeconomic and geopolitical backdrop. Valuations in several segments now reflect a high level of investor optimism, underscoring the continued importance of careful security selection and portfolio construction.

In this environment, we maintain a defensive stance while remaining attentive to emerging opportunities for investment. Our focus continues to be on managing well-diversified portfolios across regions and industries and identifying fundamentally sound companies.

Portfolio Positioning and Activity

Portfolio activity continues to reflect a measured and methodical approach. Since the start of the year, sales have exceeded purchases across our global balanced and global equity strategies. In November, we continued to raise a moderate level of cash, taking profits in select holdings where valuations had reached or exceeded our assessment of intrinsic value. This included reducing our position in Bombardier to capitalize on gains from strong share price appreciation, while maintaining the holding within target weight ranges. We also trimmed our position in Regis Resources due to its elevated valuation following a strong run in gold prices, consistent with our perspective on the gold sector highlighted in November’s Portfolio Update letter. As a result, balanced mandates are approaching target asset allocations.

At the same time, capital remains available for deployment where fundamentals and valuations present an attractive risk-reward profile. In this context, a position was recently initiated in Canadian National Railway (CN). CN is a leading transportation company, moving over 300 million tons of natural resources, manufactured products and finished goods annually across North America. The investment was made at an attractive entry point, with the stock trading near a seven-year low. At the time of purchase, the company traded at approximately 16 times price-to-earnings, below its long-term average of 20 times, and at roughly a 20 percent discount to North American peers.

CN has faced macroeconomic pressures, including softer freight volumes and trade-related headwinds. We believe that these challenges are well understood by the market and largely reflected in current valuations. We view the company as positioned for long-term growth, supported by its operational scale, critical role in North American trade and improving freight dynamics. In addition, Canadian government investment in infrastructure projects is expected to provide a structural tailwind, supporting higher freight volumes over time. These factors, along with the company’s attractive valuation, provide a compelling opportunity to own a transportation leader with a critical role in the region’s core infrastructure.

Concluding Thoughts

The current environment underscores the importance of maintaining discipline amid strong market performance. Diversification across regions and sectors remains central, both to enhance long-term returns and to mitigate concentration risk, particularly if sentiment in specific areas of the market shifts. Maintaining this long-term approach positions portfolios to navigate evolving conditions.

The information and opinions expressed herein are provided for informational purposes only, are subject to change and are not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Any companies mentioned herein are for illustrative purposes only and are not considered to be a recommendation to buy or sell. It should not be assumed that an investment in these companies was or would be profitable. Unless otherwise indicated, information included herein is presented as of the dates indicated. While the information presented herein is believed to be accurate at the time it is prepared, Letko, Brosseau & Associates Inc. cannot give any assurance that it is accurate, complete and current at all times.
Where the information contained in this presentation has been obtained or derived from third-party sources, the information is from sources believed to be reliable, but the firm has not independently verified such information. No representation or warranty is provided in relation to the accuracy, correctness, completeness or reliability of such information. Any opinions or estimates contained herein constitute our judgment as of this date and are subject to change without notice.
Past performance is not a guarantee of future returns. All investments pose the risk of loss and there is no guarantee that any of the benefits expressed herein will be achieved or realized.
The information provided herein does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.
Certain information contained in this document constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions regarding currencies, economic growth, current and expected conditions, and other factors that are believed to be appropriate in the circumstances which could cause actual events, results, performance or prospects to differ materially from those expressed in, or implied by, these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com).
The S&P/TSX Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and TSX Inc., and has been licensed for use by Letko, Brosseau & Associates Inc. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Letko, Brosseau & Associates Inc. TSX® is a registered trademark of TSX Inc., and have been licensed for use by SPDJI and Letko, Brosseau & Associates Inc. Letko, Brosseau & Associates Inc.’s product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, or Bloomberg and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P/TSX Index.

Concerned about your portfolio?

Subscribe to Letko Brosseau’s newsletter and other publications: