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Patient Capital Quarterly Commentary – Q2 2025

North American equity markets delivered robust, though volatile, performance through the second quarter of 2025, buoyed by resilient economic data, moderating inflation, and increasing investor confidence in a potential soft landing. Despite a sharp sell-off in April triggered by U.S. tariff escalations, markets rebounded strongly through May and June as trade tensions eased, and economic data stabilized. By June 30, 2025 the S&P 500 Index and TSX Composite Index posted positive gains, with both U.S. and Canadian indices reaching record highs. Despite these advances, market leadership remained narrow, with large-cap technology and AI-driven names continuing to dominate returns. The Canadian equity market was lifted by broad-based gains across financial, industrial, and consumer sectors.

Economic data released in the second quarter was mixed. In the United States, first quarter GDP figures confirmed a -0.5%1 contraction, due to a surge in imports ahead of proposed tariff increases. However, underlying demand remained resilient, with consumer spending and business investment showing signs of strength. In contrast, Canada’s first quarter GDP surprised to the upside at +2.2%2, although forward indicators suggested slower momentum heading into the summer.

Markets were buoyed by the sharp decline in inflation across both economies. U.S. CPI fell to 2.4%3 year-over-year by May 2025, with core inflation continuing to trend lower. In Canada, headline inflation dropped to 1.7%4 below the Bank of Canada’s 2% target. The rapid disinflation bolstered expectations that central banks were nearing the end of their tightening cycles.

Monetary policy dynamics began to change. While the Federal Reserve held its policy steady at 5.25%5, it signaled two potential rate cuts in the second half if inflation remained under control. The Bank of Canada, having already cut rates to 2.75%6 in the first quarter, maintained that level through the second quarter but suggested further easing was likely.

Investor sentiment was also boosted by the de-escalation of April’s tariff shock. After initially announcing sweeping trade measures, the U.S. implemented a 90-day tariff pause in late April 2025 and re-entered negotiations with major partners, including Canada and Mexico. The other significant event during the second quarter was the conflict in the Middle East. . In our opinion, the potential risks of these developments were absorbed by investors as markets ploughed through concerns about trade wars, strained supply chains and significantly higher oil prices. Lysander-Patient Capital Equity Fund (the “Fund”) continues to be well positioned for current market conditions, and we believe the Fund will weather the existing uncertainty created by potential tariffs. The Fund’s large cash balances provide a store of wealth and give the opportunity to buy high quality businesses at attractive prices should markets become extremely volatile.

  1. Source: Bank of Canada
  2. Source: U.S. Bureau of Economic Analysis
  3. Source: Bank of Canada
  4. Source: U.S. Bureau of Economic Analysis
  5. Source: Bank of Canada
  6. Source: Federal Reserve Board
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Lysander Funds Limited (“Lysander”) is the investment fund manager of Lysander-Patient Capital Equity Fund (the “Fund”). Patient Capital Management (“Patient Capital”) is the portfolio manager of the Fund. This document was prepared by Patient Capital as portfolio manager of the Fund. In this presentation, “we”, “us”, and “our” means Patient Capital. This document has been prepared solely for information purposes. Information in this document is not intended to constitute legal, tax, securities or investment advice and is made available on an “as is" basis. Neither Lysander nor Patient Capital make any warranties or representations regarding the information herein. Information in this document is subject to change without notice. Neither Lysander nor Patient Capital assume any duty to update any information herein. Certain information in this document has been derived or obtained from sources believed to be trustworthy and/or reliable. Neither Lysander nor Patient Capital assume responsibility for the accuracy, currency, reliability or correctness of any such information.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated

This document is not an invitation to invest in the Fund and does not constitute a public offering of sale. Purchases in the Fund can only be made through an Investment Professional on the terms in the applicable Fund’s offering document by eligible investors. Each purchaser of units in a fund may have statutory or contractual right of action.

This document may contain forward-looking statements. Statements concerning a Fund’s or entity’s objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition are forward looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “aims”, “may”, “will”, “would” and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from current expectations. Readers are cautioned not to place undue reliance on these forward-looking statements. While Lysander and Patient Capital consider these risks and uncertainties to be reasonable based on information currently available, they may prove to be incorrect.

Nothing in this document should be considered a recommendation to buy, sell or short a particular security. Any specific securities or positions discussed are intended as an illustration of the portfolio manager’s selection process. The portfolio manager may sell these positions at any time, or purchase positions that have previously been sold. The positions may increase or decrease in value after the date hereof, and the portfolio that holds such positions may accordingly gain or lose money on the investment. The statements by the portfolio manager in its commentaries are intended to illustrate its approach in managing the portfolio and should not be relied upon for any other purpose. Certain information in this document has been derived or obtained from sources believed to be trustworthy and/or reliable. Neither Lysander nor Patient Capital assume responsibility for the accuracy, currency, reliability or correctness of any such information.

The S&P/TSX Composite Total Return Index is comprised of equity securities of some of the largest companies in Canada. The S&P 500 Index tracks the stock performance of 500 large companies listed on exchanges in the United States. An investor cannot invest directly in an index.

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