Portfolio Update

June 2025

Although global trade tensions have eased in recent weeks, as the Trump administration walked back several previously announced tariff measures, the situation remains volatile. Charges on imports from China were lowered and planned duties on the European Union have been paused, prompting a positive response from global equity markets through May. As of May 31st, year-to-date total returns (in Canadian dollar terms) were broadly positive across most major indices, with the S&P/TSX up 7.0%, MSCI EAFE gaining 11.7%, MSCI Emerging Markets rising 3.9%, and MSCI ACWI up 0.7%. Meanwhile, the S&P 500 has declined by 3.4% since the beginning of the year.

While rhetoric from the U.S. administration has been more conciliatory lately—and a recent U.S. trade court ruling suggests potential limits on executive trade authority—the outlook for policy remains uncertain. Prior reversals and abrupt shifts in stance underscore the continued unpredictability of trade negotiations. It remains too early to determine whether these developments signal the beginning of a sustained de-escalation or merely a temporary pause.

Navigating Market Uncertainty with Discipline and Flexibility

Following a broad selloff in April, global equity indices have rebounded and are now trading near levels last seen at the start of the year. This recovery has occurred despite limited clarity on the long-term impact of trade policy and its implications for global growth. While we do not anticipate a broad-based recession at this stage, we expect subdued economic activity in the year ahead and believe the risk of renewed market volatility remains elevated.

In this environment, we have maintained a disciplined approach to valuation and risk management. We continue to hold a moderate level of cash across our portfolios, reflecting our intent to selectively redeploy capital when opportunities warrant. With trade policy outcomes still evolving, we believe caution is warranted.

Portfolio activity mirrors our measured approach. Since the beginning of the year, portfolio sales have modestly outpaced purchases within our global balanced and global equity strategies. These actions reflect our view that several holdings had reached or exceeded our fair estimate of intrinsic value, prompting us to trim or exit positions. Alongside these adjustments, we remain ready to deploy capital into opportunities where the risk-reward profile and valuation are more compelling.

In this context, we increased our position in several existing holdings, particularly in the IT sector, such as Open Text and Alphabet, during the recent market pullback. We believe these companies offer durable long-term growth potential and they had become more attractively valued following the selloff. These recent portfolio decisions reflect our broader investment philosophy: seeking high-quality businesses exposed to enduring secular themes, such as AI adoption, while maintaining price discipline.

Our equity portfolios, trading at an attractive valuation of 12.3 times forward price-to-earnings and supported by a 3.4% dividend yield, are well positioned to deliver meaningful value over the next 3-5-year horizon.

Concluding Thoughts

We continue to monitor developments in trade policy and broader macroeconomic conditions closely. Our focus remains on managing risk while selectively deploying capital into high-quality businesses where valuations are compelling. The recent rebound in equities has largely been driven by improved investor sentiment, and we remain mindful of near-term volatility.

Our positioning reflects a balance between discipline and flexibility: realizing gains where valuations appear full, while preserving capital and remaining ready to deploy into high-conviction opportunities as they emerge.

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.
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