As published in Canadian Family Offices

The fund’s manager, Emily Wheeler, outlines her investment strategy, plus her take on interest rates, commodities and the 2026 economy.

Family offices face a familiar tension in today’s bond market: how to preserve wealth while still achieving meaningful returns amid uncertainty. Traditional fixed income strategies—once the core of a portfolio—have struggled to deliver both safety and opportunity during a time when central bank fluctuations and commodity surges alter investor sentiment overnight.

Amid this volatility, one fund has quietly outperformed its peers by looking where others aren’t. PenderFund Capital Management’s Pender Bond Universe Fund has positioned itself to not only “go with the flow,” but also properly navigate through market tumult. The fund’s recent performance suggests that it’s found a way to deliver consistent value.

This is not your average bond fund. PenderFund Capital Management’s Pender Bond Universe Fund had its best year on record in 2025 since its inception in 2020. The fund’s class F units were up 1.3 per cent over the fourth quarter and eight per cent over the year, significantly outperforming its benchmark.

Emily Wheeler, the fund’s manager, says that while 2025 was a good year for the fund and its investors, she takes a long-term view on performance. She’s more focused on cutting through the noise and delivering for clients on a consistent basis.

Economy

With the economy in 2025 and the start of 2026 being volatile, the fund is paying close attention to duration, says Wheeler. (Duration, often expressed as a number of years, refers to a bond’s price sensitivity to interest rate changes—rising rates lead bond prices to drop.)

“We have some opposing factors at play at this moment,” Wheeler says. The 2026 economic outlook is clouded by such issues as trade war turbulence, the potential for additional interest rate cuts, and a boom in certain commodities.

“So, the fund is focusing on the three-to-five-year portion of the yield curve right now,” rather than extending duration, and it’s keeping a five-per-cent direct weighting in inflation-linked securities, she explains.

What Emily’s keeping an eye on 

The high price of silver and gold is noteworthy in the context of duration considerations, Wheeler adds.

“Gold has gone up 60 per cent, and silver has gone up more than 140 per cent [through 2025],” she says. “It’s also significant that global PMI [purchasing manager index] readings have been decent, and we’ve seen an upside breakout in Japanese long bond yields after years of rate suppression. These are all reasons not to extend duration.

“On the other hand, there are factors that support extending duration. For example, we’re seeing a term premium that’s as high as it has been in a decade. That’s the extra compensation that bond holders demand for holding longer-term bonds.”

The Bank of Canada’s key lending rate remains at 2.25 per cent, with the bank not committing to further cuts in the near future, while the U.S. Federal Reserve cut its rate to 3.75 in December and is under pressure to make further cuts.

“We’re in an interest rate cut environment globally, with more cuts likely to come south of the border,” Wheeler says. “Job numbers have generally been weak, too.”

Canada lost 25,000 jobs in January 2026, though the unemployment rate ticked lower to 6.5 per cent. In the U.S., employment rose by 130,000 that same month, the unemployment rate ended the period marginally higher versus last year, and the latest JOLTS (Job Openings and Labor Turnover Survey) report showed a drop in job openings, indicative of a weakening labour market.

The fund’s holdings, plus a few opportunities 

The fund has made some additions to its portfolio for 2026.

“In December 2025, we cycled out of our existing Trulieve Cannabis Corp.’s eight per cent of 2026 first lien bonds and into the company’s new first lien 10.5 per cent issue, which matures in 2030. The move is quite favourable from several perspectives,” Wheeler says.

“The company used some of its cash to pay off a portion of its debt. So, we get a higher coupon with lower leverage.”

She also notes that the U.S. government moved recently to reclassify marijuana as a lower-risk drug, which allows Trulieve to now deduct U.S. business expenses—a tax deduction worth US$100 million a year. “They’ve been given a bit of a tailwind by the reclassification,” she says.

The Pender fund also participated in a 0.25 per cent of 2031 convertible bond issuance by Endeavour Silver, a mining company in active development of the Pitarrilla project in Mexico, one of the world’s largest undeveloped silver deposits.

“We like the fundamentals of the silver market, which has an attractive supply-and-demand backdrop,” Wheeler says. “Silver is highly conductive and, with no comparable alternative, demand has been increasing from areas including nuclear energy production, electric vehicle manufacture and the data centre infrastructure required for artificial intelligence.”

While gold is in high demand too, the fund sees silver as undervalued compared with gold on a historical basis, with the companies that mine the metal particularly undervalued versus the metal itself. The Endeavour bond’s conversion feature also offers Pender a cheap option against the company’s undervalued stock, she adds.

“We’ve also added a position in a convertible bond of Borr Drilling Ltd., a Bermuda-based company that does shallow-water offshore drilling,” Wheeler adds. “We think their stock is cheap on a historical basis, their debt is covered by the value of their rigs, and our position gives us some potential upside if the energy sector improves.”

On the non-investment grade side of the portfolio, the fund continues to look for relatively inexpensive areas of the market.

“We turn over a lot of rocks, because the more we turn over, the more opportunities we hope to find,” Wheeler says.

Despite solid returns in this area, the overall non-investment grade portion of the fund (23.3 per cent at the end of 2025) hasn’t increased materially as the fund itself has been growing.

As has been the case for several years, the 2026 economy will likely generate a few surprises, bad or good.

"For instance, there is a push for lower interest rates and maybe some yield curve control in the United States. These are not the types of things we can control, however. What we can control is continuing to find areas of the market that are relatively undervalued." Emily Wheeler