Mawer New Canada Fund (CLOSED)
As at December 31, 2025
What Does this Fund Invest In?
The Fund invests primarily in securities of smaller Canadian companies. Treasury bills or short-term investments, not exceeding three years to maturity will also be used.
Investor Suitability
Investors seeking long-term, above-average growth who can tolerate significant volatility. Medium-high risk.
Investment Strategy
In order to achieve its investment objectives, the Manager systematically creates a broadly diversified portfolio of wealth-creating companies with excellent management teams bought at discounts to their intrinsic values. The Manager employs a highly disciplined, research-driven, bottom-up process and a long-term holding period to allow for investor recognition or corporate growth, and to minimize transaction costs.
Top Holdings
Net Performance‡
As at December 31, 2025
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Q4 2025 | Performance Commentary
Market Overview
The S&P/TSX Small Cap Index furthered its advance in the fourth quarter, benefiting from strong gains
led principally by precious metals companies. Gold has moved more than 60% higher this year (in USD).
Significant movements in the price of gold are often associated with major disruption events that lead
to a flight to safety such as the COVID-19 pandemic and the great financial crisis. In both of these
cases, the magnitude of gains for gold did not come near the increase we have seen this year. The last
time there were greater increases was in the 1970s and 1980, a period during which we saw significant
inflation in the United States and the end of the U.S. dollar’s convertibility to gold. The historic move in
gold prices this year has been, in part, a result of global central banks and investors looking to insulate
themselves from geopolitical uncertainty.
Central banks continued to support risk assets, with most major institutions either cutting rates earlier
in the year or now on hold as inflation steadied, which kept financial conditions broadly supportive. In
Canada, the Bank of Canada lowered its policy rate to 2.25% in late October and held it steady in
December, viewing the current stance as broadly appropriate. In Canada, concerns remain around the
strength of the consumer and weak business investment.
AI remained the dominant market narrative, yet the year's shift from a focus on computing power to
concerns about data center profitability and power supply raised bubble concerns. History offers
uncomfortable parallels with past technological booms, such as the late‑1990s/early-2000s dot‑com
bust which developed over several years. Today, an AI arms race between the United States and China
and relatively permissive regulatory attitudes are encouraging continued investment.
Performance Commentary
It was another challenging quarter in terms of relative performance for the portfolio. The significant
underperformance is a continuation of many of the factors that have been playing out this year. The
generational move higher in gold and surging silver prices has propelled metals and mining companies
to extraordinary levels. We have had minimal exposure to this part of the market for a long time, as we
have historically found that it was difficult to find wealth-creating businesses in this area with
sustainable competitive advantages. Earlier this year, we initiated a position in Sprott, an alternative
asset management company focused on precious metals and critical materials. While this company is
not in the materials sector, the business provides exposure to precious metals through unconventional
means. In the most recent quarter, we also initiated a new position in McEwen, a conventional gold,
silver, and copper miner. At the historic prices for gold, we believe that miners have shifted to a
potential period of wealth creation. Nonetheless, given the 36% weight of metals and mining companies
in the S&P/TSX Small Cap Index, we have been challenged to keep pace, given the historic advance of
these companies on the back of strong commodity prices. We continue to review the industry for
potential opportunities.
Elsewhere, our holdings related to technology have continued to be challenged. The advancements in
AI have led to an increased perception of disruption risk for software companies, as it may make it
easier for new entrants to disrupt market share via cheaper software development. We continue to view many of our technology holdings as high-quality businesses that are highly entrenched in their
customers’ processes. Topicus.com, Vitalhub, and D2L are several of our positions that have faced
significant capital market headwinds; however, we believe the market may be over-discounting the AI
risk. Industrial headwinds have also impacted our holding in Mattr, a manufacturer of industrial goods,
as increased uncertainty has led to softer demand. Stantec has also declined on signs that growth for
the business may be slowing in the U.S.
Areas in the portfolio that exhibited strength were fundamentally strong businesses that are benefiting
from tailwinds. Recent initiation Hammond Power Solutions had a great quarter as the company is
benefiting from the increase in demand for electrical transformers as part of the buildout of AI data
centers. Kraken Robotics continued to be a strong performer, as the business, which specializes in
technology for underwater autonomous vehicles, has benefited from an increase in government
defense spending. Calian Group has also benefited from the increase in defense spending, with strong
demand across Canada, the U.K., and Europe. CES Energy Solutions, a supplier of consumable
chemical solutions for the oil and gas industry, had a strong quarter as the company is benefiting from
an increase in demand for natural gas. TerraVest Industries’ stock also bounced back after lagging in
the last quarter.
Looking Ahead
As 2025 closes, investors find themselves confronting a familiar blend of optimism and doubt. The
powerful combination of AI innovation, continued fiscal largesse, and gradually easing monetary policy
has sustained both growth and market confidence longer than many thought possible. We should also
give credit to management teams, who have generally navigated the uncertainty of the past year with
incredible poise.
Yet, beneath the surface, the contours of this expansion are being rewired. While the rules-based global
order that has presided since the end of World War II has been slowly waning for some time, the events
of early 2026 remove any doubt that we are now in a very different geopolitical era. Nineteenth century
concepts of spheres of influence, mercantilism, and power dynamics are much more germane than free
trade agreements, multilateral institutions, or the presumption of ever-deeper integration. Trade is
increasingly being rerouted through trusted corridors, policy is being used explicitly to steer capital for
strategic intent, and supply chains are being redesigned not just for efficiency, but for resilience and
control.
For investors, this shift matters less as a source of headline risk and more as a structural re-pricing of
advantages and vulnerabilities, albeit likely toward higher risk premia overall. But in important ways, this
environment plays to the strengths of genuinely long-term, bottom-up investors. A world of rewired trade
routes, politicized supply chains, and uneven AI adoption is also a world in which differences in
management quality, balance sheet discipline, governance, and capital allocation matter more, not less.
Underneath, the fundamental questions remain surprisingly stable: Can this business sustainably create
wealth by virtue of competitive advantages? Is it run by responsible stewards who can adapt to shifting
fault lines accordingly? Are we being compensated for the risks we are taking? And is my overall portfolio
resilient to a wide range of scenarios?
In a more contested and complex global order, there’s a balancing act between patience and agility.
Enduring results will come from patience anchored in first principles, paired with the agility to respond as
facts evolve. Markets are sure to present us with surprises in 2026 and beyond, but genuine wealth
creation has a reliable way of asserting itself over the long term.
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Source
https://www.mawer.com/funds/explore-funds/new-canada-fund/
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