October 31, 2025
Commentary
Monthly Update
Ninepoint Focused Global Dividend Fund - Compounded Returns¹ As of October 31, 2025 (Series F NPP964) | Inception Date: November 25, 2015
1M |
YTD |
3M |
6M |
1YR |
3YR |
5YR |
Inception |
|
|---|---|---|---|---|---|---|---|---|
Fund |
3.38% |
12.07% |
8.04% |
23.74% |
20.45% |
18.84% |
13.77% |
10.27% |
S&P Global 1200 TR (CAD) |
2.97% |
18.18% |
10.29% |
23.76% |
23.64% |
23.72% |
17.31% |
13.12% |
It was another good month for the broad equity markets but underneath the surface, there was quite a dispersion in terms of performance. According to data from S&P Global, the Information Technology sector (+6.59%) led the S&P 500 as earnings from the mega-cap tech stocks crushed expectations, for the most part. Interestingly, the quarterly report from Meta Platforms was not well received, as investors questioned the company’s accelerating capex spending given the still questionable returns on investment. The Health Care sector (+3.58%) finished the month in second place on the leaderboard, perhaps a bit surprising after a long period of relative underperformance. The laggards included the Materials sector (-4.47% on the gold price correction) and the Consumer Staples sector (-2.68%). Again, the outperformance of the mega caps can clearly be seen by examining the S&P 500 and the Equal Weight S&P 500, with returns of 2.27% and -0.93% respectively (according to LSEG).
To date, with 91% of the S&P 500 companies having reported actual results, 77% have reported a positive revenue surprise and 82% have reported a positive EPS surprise, according to FactSet. For Q3 2025, the blended (actual and expected) year-over-year earnings growth rate is 13.1%, well above the 8.0% that was expected as we entered the reporting season. Management commentaries have been broadly positive, as most companies have been able to mitigate the impact of the tariffs on profit margins. Although it would not be surprising for volatility to pick up slightly now that we have seen the results of mega cap tech, it still feels like the rally can continue through the balance of the year.
The month wrapped up with a FOMC meeting that concluded on October 29th with another 25-basis points interest rate cut, after a 25-basis points cut on September 17th, to a target range of 3.75% to 4.00% for the overnight rate. However, during the ensuing press conference, Chairman Powell’s tone seemed more hawkish than the market probably wanted to hear after he emphasized that a December rate cut was “not a foregone conclusion”. Prior to his comments, the interest rate forward curve was implying near certainty, which quickly shifted to a 67% chance of a 25 basis points cut in December. We still think we get one more cut in 2025 and based on history, interest rate cuts are supportive of continued market gains, at least in the near term.
Unfortunately, the US government remains shut, which has affected thousands of government employees, has prevented the release of timely economic data and has now led to the cancellation of flights across the United States due to safety concerns. Despite this overhang, the US equity markets remain largely unconcerned (with the S&P 500 index level valuation at 22.7x forward earnings compared to the 5-average of 20.0x and the 10-year average of 18.6x, according to FactSet) but clearly it is time to come to a resolution to before the US economy comes under serious pressure. To mitigate the risks, we have reduced outsized allocations to individual stocks and investment themes while remaining invested in a broadly diversified portfolio, in case a growth scare or some other shock materializes over the next couple of months.
Top contributors to the year-to-date performance of the Ninepoint Focused Global Dividend Fund by sector included Information Technology (+706 basis points), Industrials (+255 basis points) and Communication Services (+190 basis points), while the Utilities (-95 basis points) and Health Care (-36 basis points) sectors detracted from performance on an absolute basis.
On a relative basis, positive return contributions from the Industrials (+54 basis points), Energy (+17 basis points) and Consumer Staples (+5 basis points) sectors were offset by negative contributions from the Utilities (-170 basis points), Financials (-143 basis points) and Health Care (-99 basis points) sectors.
We are currently overweight the Information Technology, Industrials and Financials sectors, while underweight the Utilities, Communication Services and Materials sectors. As the broad market indices grind higher, we continue to grapple with valuation concerns offset by solid earnings growth and the chance of supportive rate cuts through the balance of the year.
We believe that an easier monetary policy should broaden participation in the rally through year-end and into 2026, which would be healthy in terms of the longevity of the bull market. In the meantime, to mitigate the risks, we remain focused on high-quality, dividend payers that have demonstrated the ability to consistently generate revenue and earnings growth through the business cycle.
The Ninepoint Focused Global Dividend Fund was invested in 48 positions as at October 31, 2025, with the top 10 holdings accounting for approximately 39.6% of the fund. Over the prior fiscal year, 40 out of our 48 holdings have announced a dividend increase, with an average hike of 22.0% (median hike of 8.8%). We will continue to apply a disciplined investment process, balancing various quality and valuation metrics, in an effort to generate solid risk-adjusted returns.
Jeffery Sayer, CFA
Ninepoint Partners