Foresight - Fall 2025

Despite ongoing global uncertainty, driven by U.S. tariff policies, recession fears, and a relentless cycle of negative media headlines, investors may be surprised to see their portfolios continue to rise. In our Summer Foresight we referenced our Winter 2022 edition and the discussion about de-globalization becoming one of the four major macroeconomic themes driving future economic growth. Two other areas of economic growth discussed were investment in renewable energy and in new technologies to provide automation to offset declining workforces in the developed economies. Three years later, we are seeing significant announcements of investment in these very growth drivers.

Artificial Intelligence (Al) currently dominates the business news cycle. We prefer to refer to it as high-performance computing, and is needed to drive quicker-to-market solutions, including automating manufacturing, packaging, and retailing of products and services. To achieve the faster computing speed, we need chips from companies like Nvidia whose high-speed do far more, with less power, than conventional chips. Companies are spending tens of billions in a race to build data centres to provide the new computing power required. They are also investing billions in long term renewable energy contracts to secure the power/energy required to run these data centres. Notable initiatives include:

MICROSOFT

• Committed US$80 billion toward AI-enabled data centres.

• Signed a US$1.6 billion deal with Constellation Energy to restart the 3 Mile Island Nuclear Facility and 100% of its output will power Microsoft’s data centres.

• Announced a US$1.5 billion agreement with Brookfield Renewable Energy Partners to secure 10.5 gigawatts of renewable energy.

GOOGLE (ALPHABET)

• Launched a US$25 billion investment program for building data centres.

• Secured a US$3B hydroelectric deal with Brookfield Asset Management.

META (FACEBOOK)

• Plans to spend over US$100B on data centre development.

• Entered a 20-year contract with Constellation Energy for 100% of Clinton Power Station’s output.

• Initiated a US$900M solar project with Enbridge (600 megawatts).

• Launched a 760-megawatt solar deal with Invenergy.

• Entered a 150-megawatt geothermal contract with Sage Geosystems.

AMAZON

• Committed US$60+ billion to build data centres across 5 US states (PA, IL, NC, MS, OH).

• Signed a US$18B, 17-year power agreement with Talen Nuclear Energy.

• Made a direct investment in X-Energy to develop small modular nuclear reactors.

Each one of these investments has a powerful multiplier effect on economies. Also, the construction of these data centers will provide jobs as well as tax revenues to local governments. The energy companies must invest in new production to meet the increased demand, providing similar multiplier effects for their local economies. Once these data centres are built and provide this new level of high-speed computing throughout the economy, it will be very interesting to watch the growth in investment and productivity this generates going forward.

How does all of this affect our client portfolios? Approximately 6.5% of our clients' equity portfolios hold these four companies through various exchange traded funds. Clean energy providers make up approximately 9% of our equity portfolios through holdings in Brookfield Renewable Energy Partners, Northland Power and BMO Global Clean Energy ETF.

WHAT’S NEW?

Investing news

We are constantly researching new attractive investment vehicles that satisfy our targeted exposures. In July 2025 we executed a trade across our entire portfolio to sell XIN (our long-held iShares MSCI EAFE Index ETF) and replace it with VIDY (Vanguard FTSE Developed ex North America High Dividend Yield Index ETF). Both ETFs provide our targeted exposure to a broad international equity index focused on companies located in developed markets excluding the U.S. and Canada. Below is a comparison of VIDY and XIN’s regional and sector exposures.

Region Exposure	VIDY	XIN
Europe	61.5%	64.5%
Japan	20%	21%
Pacific	15%	11%
Emerging markets	3.5%	3.5%

Sector Exposure	VIDY	XIN
Financials	39.2%	24.0%
Industrials	10.2%	19.2%
Consumer staples	9.7%	11.2%
Consumer discretionary	9.2%	9.9%
Health care	7.3%	8.0%
Energy	6.3%	7.9%
Utilities	6.3%	5.8%
Basic materials	5.1%	5.3%
Telecommunications	4.9%	3.5%
Real estate	1.3%	3.3%
Technology	0.5%	1.9%

 Their number of holdings is very similar. The comparison above shows that VIDY and XIN have similar regional exposures. They are similar sectorally, as well; except with VIDY leaning heavier on financials and lower on industrials…..given the tendency for bank stocks to satisfy VIDY’s screening for high dividend yield.

Based on our analysis of the underlying companies in the index, we found that VIDY has an attractive tilt towards companies with higher quality fundamentals, given the characteristics of companies with consistent high dividend yields that generate high, stable and sustainable returns on capital and attractive levels of free cash flow.

While ETF MER cost doesn’t drive our decision-making process (we find that ETFs are typically fairly priced relative to the complexity of the fund), it does factor into our analysis. VIDY’s management expense ratio is 0.31% compared to XIN’s 0.50%. And while we are forward-looking in our analysis, a comparison of historical returns can illuminate how a fund performs during various market cycles: VIDY significantly outperformed XIN in all time periods since inception of the fund.

Average Annual Total Returns as of June 30, 2025	VIDY	XIN
1 year	23.1%	8.3%
3 year	20.6%	14.6%
5 year	15.3%	12.4%

 Publishing news

The Ploughman and the Astronaut

It has been a year since Don’s book hit the shelves. It has received a five-star rating on Amazon. It has reached out to the US, UK, Germany, Holland, Italy, Denmark, Australia, South Africa and Costa Rica.

Don was invited to do a book signing on September 13th at the Chapters/Indigo outlet in West Vancouver. You can follow the book at his author website: donnilson.com.

A + F + T = A Good Portfolio

Our core philosophy since 1994 has been to integrate Accountability, Financial Planning and Tax Planning into investment management. Accountability is about our Annual Report which keeps you up-to-date on how your wealth is invested and how it is growing. Financial and Tax Planning draw from our 40+ years with experience and professional designations in those areas.

Financial Planning has two scenarios. First is a comprehensive, formal Plan which projects income, expenses and asset balances over remaining life time. Second is a modular approach which addresses the relevant issues of the time as one progresses through life...education, work, marriage, children, retirement and later years. Decisions at certain ages may benchmark this modular planning, eg age 60-70 for CPP, age 65-70 for OAS, age 71 for RRSP/RRIF conversions and work retirement pension elections. Also addressed is debt management, saving accumulation and, perhaps, capital draw-down in later years.

Fundamental principles of Know Your Client mean that we should be aware of both your “balance sheet” and your “income statement”…. where the T in AFT refers to “taxation”. Tax preparation and planning rests with your accountant/tax preparer. However, as investment managers, we inter-link with them and CRA to understand your income, deductions, marginal tax brackets and various carry forward balances (like RRSP and TFSA rooms and loss carryovers). Having access to this information allows us to be on top of your tax data and contribute to wise and timely financial decisions. Our familiarity with your tax data also creates the opportunity to initiate tax planning strategies to be vetted with your tax accountant. For instance, it may be wise to:

• Deregister taxable income from your RRSP at a favourable tax rate 

• Create your RRIF early (but still retain your RRSP until age 71) and use it as a conduit to create taxable income which can be split with your spouse at a favourable tax rate

• Create your RRIF early just to trigger $2,000 annually from age 65-71 at a low (or no) tax rate

• Create taxable capital gains because you have available capital losses forward

• Lay out a saving plan to utilize your RRSP deduction room before age 72

• Lay out a saving plan to utilize your TFSA contribution room

At the portfolio management level, we also practice “tax-smart” investing when a portfolio includes some combination of taxable (Trading), non-taxable (TFSA) and deferred taxable accounts (RRSP/RRIF). Tax-smart investing principles match the kinds of income (interest, dividends, trust income and gains/losses) to the kinds of account.

Trivest maintains an annual Control List for all clients and their accounts. It monitors RRSP, RESP and TFSA contributions, as well as RRIF and RESP education withdrawals. It also tracks our review of tax returns, as discussed above.

Estate News

Estate planning is a book unto its own! Upon passing, one’s assets will be distributed according to structures deliberately set up during one’s life-time. These might include a will, a trust, a designated beneficiary, a successor holder and joint tenancy. Your relationship with each of your beneficiaries also contributes to the estate architecture. Estate plans are seldom “one-and-done”; rather, they may require adjustments over time in response to changing life circumstances. The bogey man in the background is that one must be compos mentis at the time of those life changes if you wish to amend your directives. Your executor will be dealing with the Tax Man, provincial probate, financial institutions and beneficiaries. Your executor may be writing cheques on your behalf to the Tax Man and provincial probate....depending upon the architecture you create.

Triennially (including 2025), Trivest reviews all of the designations on record with NBIN.  We will be contacting clients over the next few months if we see situations that either are out-of-date or may be.

Staff News

Time flies when you are having fun! Mike George celebrates 5 years with Trivest this Fall. This summer we had a Sauder Business School intern working with us. Cassidy Karin is a West Vancouver high school graduate and she will become a BCom Grad next Spring. We have been blessed with these young folks around us....preparing for Trivest’s next generation.

Trivest’s Quadrennial Client Survey in the Fall seeks your feedback. In reviewing the questions on the survey, we decided that it would be instructive, and fun, to throw open a broader insight into the role of money and investments. So, help us visit these two questions...