Commentary
Monthly Update
Year-to-date to September 30, the Canadian Large Cap Leaders Split Corp Class A Shares generated a total return of 20.41%, and the Preferred Shares generated a total return of 5.73%.1
CANADIAN LARGE CAP LEADER SPLIT CORP. - COMPOUNDED RETURNS¹ AS OF SEPTEMBER 30, 2026 | INCEPTION DATE: FEBRUARY 22, 2024
|
|
1M |
YTD |
3M |
6M |
1YR |
INCEPTION |
|
Canadian Large Cap Leaders Split Corp - Class A Shares |
-4.95% |
20.41% |
-7.08% |
9.21% |
35.08% |
30.01% |
|
Canadian Large Cap Leaders Split Corp - Pref Shares |
0.62% |
5.73% |
1.87% |
3.78% |
7.71% |
7.72% |
During the third quarter, the TSX hit a closing high on August 25, before softening into the notoriously difficult September/October period. In addition to a momentum correction driven by concerns related to the AI-build out (a theme to which the Canadian Large Cap Leaders Corp has no real direct exposure), rising oil prices and spiking bond yields finally caught up with the equity markets.
But perhaps the clearest explanation for weakness on the TSX was the collapse of trade negotiations between Canada and the United States. After a three-day extension for last-ditch efforts, trade talks failed and on August 22 the US implemented 50% tariffs on $27.6 billion worth of Canadian exports, bypassing standard CUSMA protections. Impacted Canadian goods included motor vehicles, dairy, alcohol, furniture and even hockey equipment. In response, on September 8, Canada retaliated with counter-tariffs on $27.6 billion of US imports, including steel, agricultural equipment, appliances and electronics. With the TSX at an all-time high, it was unsurprising to see a modest pullback take hold.
Further, crude oil prices continued to move higher on a lack of progress in U.S.-Iran negotiations, occasional attacks on ships in the Strait of Hormuz and widening escalation of the conflict into Yemen and Saudi Arabia. Most notably, sky-rocketing gasoline and diesel prices began hitting consumers at the pumps, heightening inflation fears. Although our integrated oil producer (Suncor) performed well, our positions in Canada’s two largest pipeline owner/operators (Enbridge and TC Energy) unfortunately behaved more like rate-sensitives rather than energy plays.
Despite solid financial results, our Canadian bank holdings (Royal Bank of Canada and TD Bank) also declined, as the bond investors seemed to lose confidence in the economic outlook and yields spiked higher. The situation probably wasn’t helped by the US Treasury Secretary’s awkward attempt to intervene by doubling 10 to 30-year bond repurchases that, after talking tough ahead of the announcement, amounted to purchases of only “at least $4 billion” during each operation through the current quarterly refunding period. In fact, bond yields subsequently moved higher, with the US 10-year bond yield hitting 5.36% by early October, a level not seen since the early 2000s.
But as we head into the US midterm elections, thankfully it seems that the markets are stabilizing in anticipation of gridlock. Based on historic precedents, equities tend to find a near-term bottom shortly before election night and have rallied over the following twelve months with a near 100% successful track record. We therefore view the September/October weakness as normal seasonality and are quite optimistic regarding future equity returns, both sides of the border.
In keeping with our mandate, we remain invested in a diversified portfolio of high quality, dividend-paying Canadian companies. With significant exposure to the Energy and Financials sectors, along with diversifying positions in the Industrials, Consumer Staples and Utilities sectors, we believe that we have a well-constructed portfolio that should work under various scenarios going forward.
From the chart below, we can see that our positions, on average, trade at an LTM price to earnings multiple of 18.5x (excluding Brookfield Infrastructure Partners, which is typically valued on cash flow), slightly below the 5-year average price to earnings multiple of 18.9x, which we believe still represents a solid opportunity for Canadian investors today.
Information below is specific to individual securities held in the Portfolio. It is only intended to describe key characteristics of individual holdings at a point in time and makes no inference about the return nor yield of either the Preferred Shares or the Class A Shares of the Canadian Large Cap Leaders Split Corp.
In terms of Canadian Large Cap Leaders Split Corp developments during the quarter, our strong track record of performance allowed the Company to announce an overnight offering of Preferred and Class A Shares on August 13, 2026. The well-received deal improved the trading liquidity of both classes of securities and should help the Class A Shares trade more closely with the respective underlying net asset values on an ongoing basis. Importantly, as of September 30, both the Preferred and Class A Shares traded at a premium to the underlying net asset values, which we believe to be a strong sign of confidence in the Canadian Large Cap Leaders Split Corp.
Finally, we would like to highlight that the Canadian Large Cap Leaders Split Corp has announced its next series of distributions, payable on October 13, 2026, to both Class A and Preferred shareholders of record at the close of business on September 29, 2026. As planned, holders of Class A Shares will receive the $0.1800 per share regular monthly dividend and holders of the Preferred Shares will receive the $0.1875 regular quarterly dividend.
As always, we appreciate the support of all those who have invested in the Canadian Large Cap Leaders Split Corp.
Until next month,
John, Jeff & Colin
Ninepoint Partners
1All returns are based on Net Asset Value per Class A share, or the redemption price plus accrued interest per Preferred share and assumes that distributions made by the Fund on the Class A shares, or Preferred shares in the period shown were reinvested in additional Class A shares and Preferred shares of the Fund as at 09/30/2026.