Second Quarter Performance Report
Markets prove to be resilient despite the headlines.
This report is presented by Kai Lam, JCIC’s Chief Investment Officer.
Performance above market averages
For the second quarter of 2025 (April, May, and June), our JCIC Balanced Fund returned 4.1% (+4.3% year-to-date) while our JCIC Equity Fund rose 7.0% (+ 6.5% year-to-date).
Our specialized equity models provided even higher returns with our Canadian Equity portfolio returning 8.9% (versus the S&P TSX Total Return Index rising 8.5%), the US Equity portfolio returning 8.2% (versus the S&P 500 Total Return Index increasing 4.9%) and lastly our International Equity portfolio returning 8.1% (versus the MSCI EAFE Total Return Index up 6%)—all figures in Canadian dollar terms - gross of fees.
Among the top-performing stocks from international markets, Rheinmetall AG (+40.6%), Taiwan Semiconductor (+29.8%) and Ryanair Holdings PLC (+29.2%) were standout performers. In Canada, leading stocks included Cameco Corp (+70.7%), Dollarama Inc. (+24.8%), and National Bank of Canada (+19.3%). In the US, top performers included NVIDIA Corp (+38.2%), Microsoft Corp (+35.9%), and J.P. Morgan Chase & Co. (+12.8%). All figures are quoted in Canadian dollars.
A busy three months
It was a very eventful quarter, starting with the launch of tariffs by President Trump towards dozens of countries on April 2nd. This was in addition to the initial tariffs towards Canada and Mexico. Even countries where the US has a trade surplus did not come out unscathed. However, some tariffs have since been delayed or reduced from the original announcement, depending on progress towards new trade agreements. The quarter also saw escalating tensions in the Middle East with attacks on Iran's nuclear development operations.
Despite the frightening headlines, the markets have been remarkably resilient. Here are three charts illustrating what we perceive to the be the principal reasons for this resiliency.
Figure 1 shows the 2025 GDP forecast for various regions has been declining since the start of the year, due to concerns about the potential impacts of a US-initiated trade war. However, economic data have been more resilient than feared, and growth forecasts have improved recently.
Figure 1.
Source: Bloomberg
Figure 2 shows inflation data from the US, Canada, and Europe, indicating that we have not seen any material impacts from tariffs at this point. Some of the tariffs have been delayed or reduced, so the real impact is yet to be seen.
Figure 2.
Source: Bloomberg
Figure 3 also indicates that the job market remains healthy in most markets, further supporting the economy. Companies have generally delivered strong earnings results over the past quarter. So far, the impact of a trade war has not been as dire as initially feared.
Figure 3.
Source: Bloomberg
Our Chief Investment Officer, Kai Lam, recently appeared on Bloomberg News Network to explain how these factors have combined to keep the markets strong.
What it means for you
Understanding that we have seen strong year-to-date performance from both Canadian and International equity markets, and very resilient US equity market performance, we still need to ask ourselves, ‘Where do we go from here as we still face President Trump's tariff policy risks?’ Panic filled headlines certainly can cause volatility on a day-to-day basis, but ultimately market reaction is not always intuitive. Whether it is the direction of the US dollar, movements in oil prices, interest rates or the equity markets, underlying metrics are more indicative than high level assumptions.
We mentioned in the last quarterly update that we took steps to reduce the risk associated with tariffs. But this also corresponded to weaker fundamentals in certain sectors irrespective of the trade war. This includes areas such as autos and cyclical commodities. When we look at our best performing stocks, they are primarily made up of companies with the best visibility on their outlook despite both tariff and geopolitical risks.
We continue to monitor stocks that have been unjustly punished for trade war risk where fundamentals may have bottomed and offer long term potential. On the flip side, we have also taken the opportunity to take profits in some positions where share price performance has been strong but valuation and the outlook are less attractive relative to other opportunities. Ultimately, we invest for the long-term and base decisions on company fundamentals rather than trying to time the market and reacting to headlines.
If you have questions about any of this information, please don’t hesitate to reach out to us:
Disclosure:
Although we obtain information contained in our newsletter from sources we believe to be reliable, we cannot guarantee its accuracy. The opinions expressed in the newsletter are those of JCIC Asset Management, its editors and contributors, and may change without notice. Any views or opinions expressed in the newsletter may not reflect those of the firm as a whole. The information in our newsletter may become outdated and we have no obligation to update it. The information in our newsletter is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is provided for information purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor or a group of investors. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. We strongly advise you to discuss your investment options with your Relationship Manager prior to making any investments, including whether any investment is suitable for your specific needs.
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* Performance percentages stated are gross of fees.