Guardian Capital Canadian Focused Equity
Mandate commentary
Q3 2026
Highlights
① The mandate underperformed its benchmark, the S&P/TSX Composite Index, during the quarter. Negative security selection was the largest detractor from relative performance in the quarter.
② Earnings growth provided a powerful tailwind for equities.
③ Inflation, energy costs pushed long-term yields higher.
Mandate overview
The mandate’s performance was due to negative security selection, with negative sector allocation detracting from relative performance to a lesser extent. Contributions to performance from sector allocation were driven by an overweight allocation in the information technology sector. Contributions from security selection were driven by stocks in the energy sector, including Suncor Energy Inc. and Canadian Natural Resources, and the communication services sector driven by Telesat Corp.
An underweight allocation in the materials sector and an overweight allocation in consumer staples detracted from relative performance in the quarter. Underperformance from stock selection was primarily due to portfolio holdings within the information technology sector (including CGI Inc. and Open Text Corp.) as well as the financials sector.
Mandate: Guardian Canadian Focused Equity portfolio stock review
Performance contributors
Mattr outperformed in the quarter, as revenue and profitability growth accelerated rapidly. This was in line with the expectations that the headwinds that Mattr had been facing were short-term.
Suncor Energy benefited from a robust commodity and refining environment that played to its strengths as an integrated producer with a strong marketing franchise.
Performance detractors
Element Fleet Management’s recent share price underperformance was primarily driven by market concerns that near-term fleet origination is growing slower than expected.
MDA Space’s third quarter share price underperformance was primarily driven by general market volatility in a rising interest rate environment and continued trade uncertainty.
Total gross returns:
Total return (CAD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
GUARDIAN CAPITAL CANADIAN FOCUSED EQUITY | -2.19 | -1.34
|
Mandate positioning
The manager did not enter any new positions or fully exit any existing positions in the time period.
Market overview: earnings growth provided a powerful tailwind for equities
The third quarter showed that the current business cycle still has support, but risks have shifted. Growth held up, earnings improved and corporate investment remained firm, but higher oil prices, persistent inflation and rising long-term yields made the path forward less certain. Equities advanced as earnings provided fundamental support, even as higher rates raised the bar for further gains.
Canadian equities benefited from gains in resources and financials. Higher oil prices supported energy, while precious-metals companies were among the strongest performers. Bank earnings were supported by capital-markets activity, trading income and contained credit costs. U.S. equities also advanced, supported by strong earnings and continued technology investment. Higher yields weighed on more rate-sensitive areas.
International markets remained constructive overall, with parts of Asia benefiting from continued demand across the AI technology supply chain. Fixed income faced greater pressure as rising government bond yields outweighed coupon income, while credit remained comparatively resilient. Across markets, the central tension increasingly became earnings strength versus higher inflation and interest rates.
Market outlook: inflation, energy costs pushed long-term yields higher
With the recent earnings strength, the bar for market performance is higher. U.S. valuations are at the upper end of their historical range and have come under pressure from higher bond yields. Investor sentiment points to strong earnings growth going-forward, which could support equities in the near term, but the magnitude of gains may be muted.
The U.S. Federal Reserve and Bank of Canada each face two rate decisions this year, and persistent inflation has shifted central banks toward a tighter policy stance. Long-term yields remain a pressure point for equities, while also improving the income available from bonds.
The U.S. midterms may add to market volatility, but the path forward will be shaped by the economic cycle, inflation and interest rates.
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This commentary may contain forward-looking information, which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 30, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised, whether as a result of new information, changing circumstances, future events or otherwise.
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