Noteworthy Developments: Global equities rose modestly in February, as strong gains in international developed and emerging markets offset declines in U.S. large-cap stocks driven by weakness in the technology and communications services sectors. The CAD was essentially unchanged vs. the USD during the month.
Global Equities: Global equities rose 1.2% during February, as measured by the MSCI ACWI Index. Performance diverged across regions. U.S. large-cap equities (S&P 500) declined 0.9%, while emerging market equities advanced 5.4% and international developed equities rose 4.5%.
Emerging markets led global performance, with Asian markets such as Korea (+22.5%) and Taiwan (+11.5%)
benefiting from continued demand tied to the semiconductor supply chain and the buildout of AI datacenter
infrastructure. International developed equities also advanced, with Europe and Japan supported by resilient
corporate earnings and investor rotation away from the more technology-concentrated U.S. market.
Style leadership favored value stocks (+3.2%) vs growth stocks (-1.0%). Sector performance reflected this
dispersion, with cyclical sectors tied to capital spending and real-economy investment among the strongest
performers, including materials (+9.8%), utilities (+8.6%), energy (+8.2%), and industrials (+6.8%).
Communication services (-4.8%), consumer discretionary (-3.3%), and information technology (-1.1%) were
among the weakest sectors. Given their significant weight in the U.S. large-cap equities, weakness across these
sectors contributed to the S&P 500’s decline.
Within technology, software companies were particularly pressured. Investors reassessed the long-term
competitive implications of rapid advances in artificial intelligence, raising concerns that AI-enabled tools could
disrupt portions of the traditional enterprise software model. The selloff was exacerbated by elevated valuations
across many software companies following strong performance over the past year, as these firms had been viewed
as key beneficiaries of AI adoption.
Fixed Income: The Canada Broad Market Index rose 1.7% during February. Canadian government bonds gained 1.9%, as declining sovereign yields across much of the curve drove price appreciation in high-quality fixed income
securities. Yield declines were most pronounced in intermediate and longer maturities, where government bond
yields fell roughly 20–30 basis points during the month. Provincial and municipal bonds rose 1.8%, while
corporate bonds gained 1.2%, benefiting from lower base rates and coupon income.
Alternatives: Hedge funds posted modest gains during February, with the HFRX Global Hedge Fund Index rising 0.3%. Macro strategies led performance with the HFRX Macro/CTA Index gaining 1.3%, while equity hedge strategies also rose 0.7%. Relative value strategies were largely flat, while event driven strategies declined slightly (-0.2%).
Manager Comments:
Eminence: -4.8%: underperformed various indexes including MSCI World (+0.6%) and S&P Midcap (+3.9%) due to idiosyncratic weakness across several positions.
CAD February Market Commentary
Noteworthy Developments: Global equities rose modestly in February, as strong gains in international developed and emerging markets offset declines in U.S. large-cap stocks driven by weakness in the technology and communications services sectors. The CAD was essentially unchanged vs. the USD during the month.
Global Equities: Global equities rose 1.2% during February, as measured by the MSCI ACWI Index. Performance diverged across regions. U.S. large-cap equities (S&P 500) declined 0.9%, while emerging market equities advanced 5.4% and international developed equities rose 4.5%.
Emerging markets led global performance, with Asian markets such as Korea (+22.5%) and Taiwan (+11.5%)
benefiting from continued demand tied to the semiconductor supply chain and the buildout of AI datacenter
infrastructure. International developed equities also advanced, with Europe and Japan supported by resilient
corporate earnings and investor rotation away from the more technology-concentrated U.S. market.
Style leadership favored value stocks (+3.2%) vs growth stocks (-1.0%). Sector performance reflected this
dispersion, with cyclical sectors tied to capital spending and real-economy investment among the strongest
performers, including materials (+9.8%), utilities (+8.6%), energy (+8.2%), and industrials (+6.8%).
Communication services (-4.8%), consumer discretionary (-3.3%), and information technology (-1.1%) were
among the weakest sectors. Given their significant weight in the U.S. large-cap equities, weakness across these
sectors contributed to the S&P 500’s decline.
Within technology, software companies were particularly pressured. Investors reassessed the long-term
competitive implications of rapid advances in artificial intelligence, raising concerns that AI-enabled tools could
disrupt portions of the traditional enterprise software model. The selloff was exacerbated by elevated valuations
across many software companies following strong performance over the past year, as these firms had been viewed
as key beneficiaries of AI adoption.
Fixed Income: The Canada Broad Market Index rose 1.7% during February. Canadian government bonds gained 1.9%, as declining sovereign yields across much of the curve drove price appreciation in high-quality fixed income
securities. Yield declines were most pronounced in intermediate and longer maturities, where government bond
yields fell roughly 20–30 basis points during the month. Provincial and municipal bonds rose 1.8%, while
corporate bonds gained 1.2%, benefiting from lower base rates and coupon income.
Alternatives: Hedge funds posted modest gains during February, with the HFRX Global Hedge Fund Index rising 0.3%. Macro strategies led performance with the HFRX Macro/CTA Index gaining 1.3%, while equity hedge strategies also rose 0.7%. Relative value strategies were largely flat, while event driven strategies declined slightly (-0.2%).
Manager Comments:
Eminence: -4.8%: underperformed various indexes including MSCI World (+0.6%) and S&P Midcap (+3.9%) due to idiosyncratic weakness across several positions.
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