Global stock markets had a very strong quarter despite US tariff headlines and two ongoing military conflicts. The combination of better than expected second quarter earnings results, tame inflation, and expectations of lower interest rates drove markets to all-time highs. In addition, gold and silver prices rallied strongly as a hedge due to geopolitical uncertainties.
Both the Matco Canadian Equity Income Fund and the Matco Opportunities Fund participated in this rally. First, as many of our companies beat and raise revenue and or earnings expectations for 2025. Second, both funds have exposure to gold and silver companies which benefited from the commodity rally.
Now, let's turn to the Matco Canadian Equity Income Fund. In third quarter, the fund was up 9.5% and year-to date ending September was up 22.8%. The fund's dividend yield was 2.7%. During the quarter, we were active in managing the fund, buying three new positions and selling one existing holding. Through it all, we stayed true to our approach. Invest in stable, fairly priced companies that reward shareholders. Top sector weights in the fund were financials at 33%, industrials at 20%, and energy at 18%. Total gold and silver sector exposure was 9%.
Now let's turn to the Matco opportunities fund. Small and midcap companies perform very well during the quarter as earnings also beat expectations and the Bank Canada cut interest rates again. Small cap stocks usually do well when central banks are cutting interest rates. Over the quarter, we met with 16 potential portfolio companies. As a result of these meetings and our further due diligence, we added five new companies and sold two existing holdings in the fund.
The Matco opportunities fund was up 17.5% during the quarter and year-to-date ending September was up 33%. We continue to search for underfollowed or out of favor companies that have revenue or earnings inflection points over the next 12 months. The fund is positioned across these top key sectors. Technology at 33%, materials at 22%, and industrials at 15%. Gold and silver sector exposure was 16% at quarter end.
Now looking ahead to the rest of 2025, remain positive on the stock market based on the following factors. First, central banks are in rate cutting mode. Second, government spending is likely to ramp up to offset the negative impact of US tariffs. Third, Canadian stocks relative to other developed markets remain inexpensive.
That said, given the strong stock market rally in the third quarter, we remain aware that a minor pullback is possible as the market consolidates recent gains before moving higher. If in fact that happens, we would see this as a buying opportunity again for long-term investors.
