Small-Cap Equity Fund

December 31, 2025

Market Context

• The Canadian small-cap market (Morningstar Canada Small Cap Index) rose 53.6% in 2025. U.S. small-caps gained 6.5% in Canadian dollar terms.
• Resource-oriented companies in the small-cap market were the key driver of returns, particularly gold producers. Technology and consumer sectors produced negative returns.  

Portfolio Specifics

• The fund consists of 18 companies, reflecting a concentrated, high-conviction portfolio. Holdings are predominantly Canadian, with a modest allocation to U.S. companies used selectively to gain exposure to industries not well represented at home.
• Portfolio performance in 2025 featured strong gains from resource holdings and elevated buying and selling activity late in the year to take advantage of new opportunities, sell down winners and engage in tax-loss harvesting.
• Gold-related holdings were notable contributors over the year, benefiting from higher commodity prices and strong operating leverage. Positions in TOREX GOLD and EQUINOX GOLD delivered substantial gains. While gold remains an important component of the portfolio, the manager believes much of the upside has been realized and expects exposure to decline over time.
• Proceeds were invested in three new holdings in the fourth quarter. SUPERIOR PLUS distributes propane and natural gas in the U.S. and Canada. JAMIESON WELLNESS is a leader in natural health. K-BRO LINEN offers laundry services to hotels and healthcare operators.
• Two holdings received buy-out offers in the year. ANDLAUER HEALTHCARE was purchased by global shipping giant UPS. MEG ENERGY was acquired by Cenovus. The fund holds some Cenovus stock as part of the transaction.
• ATS, EQB, INTERFOR, and GREENBRIER, were sold for tax-loss purposes despite continued confidence in the underlying business quality, with the potential to revisit these positions after the required waiting period.

Positioning

• The portfolio has a unique composition, with key areas of investment being capital goods, industrial services, food & beverage, and consumer discretionary companies. This contrasts the small-cap market’s heavy focus on resource companies.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.