Foresight - Spring 2026

“It was the best of times, it was the worst of times….”

Thusly we started our editorial in the Spring 2023 issue….quoting the opening lines from Charles Dickens’ A Tale of Two Cities in 1859. Fast forward to lyrics in 1967 from the Rascals Band: “How can I be sure...in a world that’s constantly changing?” So many people, places and things to worry about. Lastly, our least favourite pithy statement “This time..it’s different!”

We frequently have shared with you the grounded wisdom from authors Staunton, Dimson and Marsh in their two books “Triumph of Optimists” which examined 120 years of global investing returns. The title of the book was very apt: patient, conscientious investors win over time. (see the Fall 2023 issue of Foresight on our website for a refresher).

Back to the Spring 2023 issue, we introduced a new industry term—“recovery” return, which means getting back what you lost previously. If you earned 25% in year two, but lost 20% in the year prior, then you are actually at break even, and earned nothing for two years. Ergo, no point to bragging about the 25% return.

Now today we may soon face the flipside: a “give back” return. Three year, annual compound returns are seen to December 2025 of 11.9%...and that makes 40% cumulatively over the three years! Furthermore, this particular portfolio has a 31 year annual compound return of 7.7%. So, the extra 4+% over these last 3 years is probably “fat” to survive a winter or two ahead with down markets.

Nobel-winning behavioural economists Daniel Kahneman and Amos Tversky identified “loss aversion” as a powerful cognitive bias where the psychological pain of losing is about twice as intense as the pleasure of gaining an equivalent amount. In essence, gains are a right and losses are an injustice.

Every month we monitor the markets - and your portfolio - in a myriad of ways...micro and macro. Our proprietary investment management software has a dashboard full of market indicators. We term these as Calls-To-Action indices. The Fall 2024 issue of Foresight explained these in detail, and can be re-read on our website.

One of our monthly, macro indicators tracks the monthly movement of Canadian and global equities within our own portfolios. This provides us with regular perspective. For instance, the twelve-month compound returns to June 30, 2025 were 16.5% and 10.3% respectively. That said, the one-month returns for February 2026 were 6.2% and 3.5%!

Our micro and macro indices give us action indicators for both When? And What? On average, we rebalance 3-4 times a year to harvest...and more frequently if you send us cash calls.

We received very late shipment of the 2026 pocket calendars. Reach out to us if you would like one. Our newsletter has gone digital now...call if you would like paper.

 A Global Approach....

At Trivest, we take a global approach to investing in equity markets as part of our diversification strategy. Volatility in these international investment returns can be exacerbated, or  mitigated, by currency fluctuations. When investors buy an investment in a country, or ‘union of countries’ (as in Europe), they also implicitly are buying the underlying currency. At the end of an investing year, the investor’s return is equal to that foreign market’s return, plus-or-minus the exchange conversion back into the investor’s home currency. Therefore, for a  Canadian investor, an appreciation of the loonie is “bad”, ie lowers the international return. As you can see below, in any given year, the cross-currency exchange movements between two countries can be significant.

The following chart shows the last five years of exchange fluctuations:

Historical Annual Change in Canadian Exchange Rates From Canadian dollar to:
	2025	2024	2023	2022	2021
US $	+4.92%	-8.08%	+2.40%	-6.39%	+0.43%
Euro	-7.24%	-2.02%	-1.16%	-0.46%	+8.46%
Japanese Yen	+4.85%	+1.96%	+9.84%	7.21%	+12.17%

(“+“ means a rise of the Canadian $)

We continue to augment your foreign content with a list of international ETFs that are “hedged” to remove the currency impact of international investing, and they span geographic regions and industrial sectors. You may see them on your NBIN statement by their ticker symbols, including XHC,  XCD, XGI, XQQ, VUS, XEH, XIN, CJP, XSP, XSU and VEF.

The bolded returns across the diagonal in the chart below show the calendar 2025 domestic equity price returns (ie excluding dividends) in the major economies. All of the other entries include the currency impact on these returns to show the effective returns for investors who are branching out internationally from their own domestic market. Global markets performed exceedingly well across the board, with double digit returns. The left hand column shows the 2025 currency-adjusted returns for Canadian investors branching out across the globe.

Quarterly data that we track show that, over the past 19 years, the U.S./Canadian foreign exchange movements contributed approx. 8% of total return.

Annual Equity Index Price Returns that include Foreign Exchange Changes Calendar 2025
Country/     Equity Index	Canadian Investor	American Investor	European Investor	Japanese Investor
Canada / TSX 60	29.06%	33.98%	21.82%	33.91%
U.S. / S&P 500	13.19%	17.88%	6.09%	17.52%
Europe / Euro 350	28.31%	33.87%	20.50%	33.46%
Japan / Japan 150	20.36%	25.35%	13.52%	24.99%

The following chart shows on the right the last five years of price-only returns for a Canadian investing around the world. It also shows, on the far left column, the 21 year annual compound returns (2005-25). The difference between that and the Domestic International returns column to its immediate right, highlights the 21 year geometric currency impact on Canadians investing internationally. You can see that these 21 years of currency volatility have cumulatively contributed somewhat to the Canadian investor returns abroad.

Canadian Investor International Returns 2005-2025

	Cdn   21 yr cpd	Dom Int’l 21 yr cpd	2025	2024	2023	2022	2021
TSX 60	8.62%	8.62%	29.06%	21.04%	12.05%	-6.24%	28.05%
S&P 500	11.52%	10.03%	13.19%	33.81%	23.94%	-11.28%	28.29%
Euro 350	7.22%	6.65%	28.31%	11.71%	17.99%	-8.12%	18.27%
Japan 150	6.32%	6.66%	20.36%	20.09%	21.70%	-10.14%	3.86%

Investors have an affinity towards high returns. It makes them feel better, and fortifies their feeling of financial comfort. Investment management isn’t just about generating returns.... it is about generating returns relative to risk. Risk-and-return operate asymmetrically...meaning that achieving higher returns probably means that one has taken on more risk, but conversely, taking on more risk does not guarantee higher returns. One of the sub-characteristics of a portfolio is its volatility: how much does it fluctuate in value – in the short run, but more importantly, in the long run. One of the markers for this is the statistical measure called standard deviation. In the following chart, we have calculated the 21 year standard deviations from the historical return data in the Annual Equity Index Returns chart. The numbers on the right represent the standard deviation for each of the geographic domestic markets. The numbers on the left represent the standard deviation for a Canadian investing in those markets, factoring in the currency aspect. 

Standard deviation	Canadian investor	Domestic Int’l
TSX 60	15.53%	15.53%
S&P 500	11.52%	16.66%
Euro 350	15.11%	17.09%
Japan 150	13.96%	20.81%

Here, we see that the 21 year currency fluctuations acted to reduce the volatility for a Canadian international investor. This analysis can be fine-tuned by creating a mock portfolio where a Canadian investor invests across all of these geographic markets (simulating what we actually do). This mock portfolio would produce a 21 year annual compound equity price return of 9.09% to a balanced global portfolio, with a standard deviation of 12.67%. The dividend yield adds approx. 2%. Always beware of “lies, damned-lies and statistics”! These analyses are only based upon the 21 years that we have been tracking this data. Prudent investing always needs a long term perspective.

 Twelve month sectoral results for 2025

 The chart below shows our annual report on how the industrial sectors performed in Canada, the U.S. and globally for 2025. These are price returns, which means they include the price appreciation (or decline) year-over-year, but exclude dividend income (approx. 2%). The Canadian results are reported in our domestic currency. The U.S. S&P returns are reflected in USD rather than our currency, so that the foreign exchange movement does not contaminate a comparison. Global returns of course reflect a myriad of the world’s currencies, which here are consolidated in USD; thus, there is some foreign exchange element to that data. The top line “WHOLE INDEX” return data in the chart below result from applying sector weightings to the sector returns. These weightings are different in the three regions. The 2024 comparative WHOLE INDEX returns appear (in brackets) below.

All three markets posted strongly positive WHOLE INDEX returns for the third year in a row, with Canada in the lead in 2025. In the whole table, only 1 of the 30 sector data points had a negative return, which was minor. Some Canadian sectors were radically counter to the global returns, positively for materials and consumer discretionary, and negatively for industrials, health care and telecoms (global telecoms have massively out-performed Canadian telecoms for 3 years in a row). The gob-smacking 98% for Canadian materials merits further comprehension. 75% of the Canadian Materials ETF XMA constitutes gold; the rest is copper and other minerals. The global base metals ETFs, XBM and XMI, do not have that concentration, and also include a foreign currency loss.

In the global markets, three of the ten sector returns were significantly lower than the Whole Index. Investors need to understand that investing isn't just “buying the market”; rather, it includes selective sector picking. We monitor these sectoral movements and re-balance at various points in the year (typically 3-4 times) to realize the appreciation in leading sectors, and seek buying opportunities in the lagging ones.

For the year 2025 (2024) SECTOR	Annualized Price Returns for S&P Global 1200 Index Sectors (in US dollars)	Annualized Price Returns for US S&P 500 Index Sectors (in US dollars)	Annualized Price  Returns for Cdn. Composite Index Sectors (in Canadian dollars)
WHOLE INDEX	20.8% (16.7%)	16.4% (23.3%)	28.2% (18.0%)
Energy	10.0%	5.0%	14.0%
Materials	24.3%	8.4%	98.2%
Industrials	23.9%	17.7%	1.9%
Consumer Discretionary	8.2%	5.3%	28.3%
Consumer Staples	6.4%	1.3%	11.2%
Health Care	13.0%	12.5%	-2.1%
Financials	25.7%	13.3%	30.8%
Information Technology	26.6%	23.3%	22.9%
Telecommunications	31.8%	32.4%	4.0%
Utilities	22.2%	12.7%	14.9%