During the first quarter, the flip-flop on new US tariffs dominated global headlines in the daily direction of stock markets. Inconsistent messaging about tariffs and the end goal caused market confusion as investors were inundated with lies about other countries real tariff policies.
Meanwhile, here back at home, the Bank of Canada proactively cut its overnight lending rate as inflation cooled and the impact of a potential trade war with the US weighed on business sentiment. Despite all the noise, sectors of the Canadian stock market like materials and energy helped keep the fund steady during this volatile time.
Our focus on strong, reliable companies that pay dividends help manage risk. While some of our technology and financial stocks didn't perform as well, our picks in the consumer discretionary and energy sectors added value. In the first quarter, the Matco Canadian Equity Income Fund was down only 9%. At the end of March, its dividend yield was 2.7%.
Now, we were busy during the quarter. In anticipation of a trade war, we reduced our exposure to the US consumer discussionary sector by selling three holdings and adding five defensive companies. These companies were in the silver, utilities, healthcare, and telecom sectors. In total, we bought eight new positions and sold six holdings. Through it all, we stayed true to our approach. Invest in stable, fairly priced companies that reward shareholders.
Periods like this can feel uncertain, but they also open the door for long-term opportunities. Lower valuations mean we can invest in strong businesses at better prices. This isn't a time to panic. It's actually a time to stay patient, stay focused, and think long term. Even with all the uncertainty, we see opportunity. Many Canadian companies are trading at lower valuations compared to their global peers, but they're still strong and profitable. With pro-growth policies on the horizon over the next 12 to 18 months, 2025 could be the year that foreign investors return back to Canada.
