The month of May felt an awful lot like April,\u00a0and it\u2019s not just the weather.\u00a0April was a positive month that saw equity markets recover most, if not all, of the March losses stemming from the US-Iran war concerns.\u00a0Turning the calendar over to May, many market observers were calling for more of a pause.\u00a0The conditions that led to the March selloff (higher oil prices and bond yields) had not gone away and were accelerating higher.\u00a0Yet,\u00a0as is often the case,\u00a0the equity market did what makes most people wrong and again \u2018climbed the wall of worry\u2019, to finish the month at all-time high levels.<\/p>\n
What did change was an acceleration of corporate earnings. Heading into the Q1 reporting season there was a lot of uncertainty.\u00a0The impact of AI on software companies and white-collar employment was a fear that hit markets earlier in the year.\u00a0Add to that the surge in energy prices, combined with the breakdown of the global supply chain, and it seemed like the perfect backdrop for corporate executives to give cautious guidance.\u00a0However, that wasn\u2019t the case. Outside of some retailers that commented on a slowdown at the lower end of the consumer, broadly earnings were stronger than expected.<\/p>\n
Of course, energy companies surprised to the upside given the surge in related commodity prices but other sectors also showed surprising gains.\u00a0Technology continued its leadership.\u00a0Spending on AI related projects shows no signs of slowing down and given the record amount of capital raised in the high yield market, it doesn\u2019t look to pause in the near term.\u00a0Semiconductor companies have risen, up 70% in two months, but its different names within the group that are moving higher.\u00a0NVIDIA Corporation (NVDA) continues to put out record financial results, but other companies such as ARM Holdings PLC (ARM) and Micron Technology Inc. (MU) are seeing their share prices move higher.<\/p>\n
It was also a positive to see software companies recover.\u00a0At least for now,\u00a0in our view, fears of the effects of AI appear to be overstated.\u00a0Most companies reported little or no impact on demand during the quarter.\u00a0The shares of many of these companies surged on these reports potentially on short covering.\u00a0Dramatic price moves like these are often associated with \u2018late cycle\u2019 behaviour.\u00a0It\u2019s too soon to determine if that is the case once again, but bears watching.\u00a0Narrow markets such as we are witnessing can turn quickly.<\/p>\n
One theme that does seem ready to take hold is an increase in corporate activity. Mergers and acquisitions were near a record last year and appear to be continuing that trend this year.\u00a0Activist investors are aggressively targeting smaller companies that have seen their valuations fall.\u00a0There is also a push to see deals announced and approved before there is a potential change to a less business friendly administration in Washington later this year.<\/p>\n
We are also getting ready for what should be the largest IPO in history, SpaceX.\u00a0This issue has the potential to set all sorts of records for hype and scale.\u00a0It also has been able to circumvent the inclusion rules of several index providers to be added sooner than it usually would, which could make the broader market even more volatile.\u00a0Given the attention around this deal and what is at stake for many investment dealers, there is a huge incentive to hold markets near record levels until it has closed.\u00a0Once that is done who knows what will happen?<\/p>\n
One pattern that is being increasingly pointed out is that during US mid-term election years there has been a tendency for a summer correction. Will this year be any different?\u00a0Of course, the sitting President has all the incentive in the world to try to show market gains heading into the vote, and Trump won\u2019t be any different.\u00a0There is also the added push to have everyone happy for the 250e<\/sup> anniversaire.e<\/sup>Mais cela ne repose pas enti\u00e8rement entre les mains d\u2019une seule personne.<\/p>\n With markets at all-time highs, the risk is always that we are missing something and might be pricing in all the good news while ignoring some risks? There remains an expectation there will be a deal shortly to end the conflict with Iran and with that a normalization of shipments from the Strait of Hormuz. The new Chair of the FOMC is also saying all the right things about being market friendly and pushing back on rate hikes.\u00a0Add to that the optimism around earnings strength and it\u2019s difficult to come up with what could be even better news?<\/p>\n Given that setup, the risk\/reward for equity markets remains concerning.\u00a0Warning lights are flashing but that alone isn\u2019t enough to say it\u2019s time to step away.\u00a0There remains the potential for further gains, and seeing a broadening out of the rally to include other sectors would be a positive.\u00a0Yet the setup for a volatile summer remains and must be watched.\u00a0Hopefully during some warmer weather.<\/p>\n The Pender Alternative Multi-Strategy Income Fund was up 0.9%1<\/sup><\/a> for May and is now higher by 2.5% YTD2<\/sup><\/a>. The Fund's blended benchmark returned 0.6% and 2.8%3<\/sup><\/a> for the same period.<\/p>\n Our expectations of a volatile start to 2026 appear to be playing out. Following continued strong performance in the first quarter, the Fund has seen more muted results of late.<\/p>\n To best position the Fund going forward, we continue to adjust weightings across our underlying owned portfolios. The Pender Alternative Absolute Return Fund (PAARF), held to dampen volatility and provide downside protection in choppy markets, was -0.4%1, 4<\/a><\/sup>, with its benchmark returning 1.2%5<\/a><\/sup> for the same period. The Pender Corporate Bond Fund (PCBF), held for its total return and opportunistic credit approach, was up 2.1%1, 6<\/a><\/sup> for May and is now higher by 5.8% YTD. The Pender Alternative Arbitrage Plus Fund (PAAPF), held for merger arbitrage exposure, was up 0.7%1, 7<\/a><\/sup> for May and is now positive by 0.3% YTD. It\u2019s benchmark returned 0.2%8<\/a> <\/sup>and 3.1% for the same period.<\/p>\n Today's markets are volatile and constantly shifting. Given the current environment of historically tight credit spreads, we remain in a neutral stance with equal exposure to both PCBF and PAARF. The continued uptick in M&A activity and new issuances is encouraging, we expect this to increase, which should act as a catalyst for PAAPF. As we enter the summer months, we are looking for opportunities to add to our PCBF exposure in the event of market dislocations. Cash remains a component of the asset mix, though it is not material at this point. We continue to monitor correlations across the Fund's underlying exposures and will introduce additional asset classes or make tactical shifts as opportunities arise.<\/p>\n Greg Taylor, CFA 1<\/a> <\/sup>Tous les rendements signal\u00e9s sont ceux des parts de cat\u00e9gorie F du Fonds, \u00e0 moins d\u2019indication contraire. D\u2019autres cat\u00e9gories de parts sont offertes. Celles-ci pourraient pr\u00e9senter des frais et des rendements diff\u00e9rents. <\/em><\/p>\n 2<\/a><\/sup> Standard Performance Information for the Fund may be found here: https:\/\/penderfund.com\/fund\/pender-alternative-multi-strategy-income-fund\/<\/em><\/p>\n 3<\/a><\/sup> L\u2019indice de r\u00e9f\u00e9rence mixte du Fonds est constitu\u00e9 \u00e0 9 % de l\u2019indice universel obligataire canadien FTSE, \u00e0 25 % de l\u2019indice ICE BofA US High Yield Index, \u00e0 33 % de l\u2019indice HFRI Credit (couvert en CAD) et \u00e0 33 % dans l\u2019indice HFRI ED : Merger Arbitrage (couvert en CAD)<\/em><\/p>\n 4<\/a><\/sup> Standard Performance Information for the Fund may be found here: https:\/\/penderfund.com\/fund\/pender-alternative-absolute-return-fund\/<\/em><\/p>\n 5<\/a><\/sup> The benchmark used is the HFRI Credit Index (USD). The Fund\u2019s benchmark is the HFRI Credit Index, hedged to CAD<\/em><\/p>\n 6<\/a><\/sup> Standard Performance Information for the Fund may be found here: https:\/\/penderfund.com\/fund\/pender-corporate-bond-fund\/<\/em><\/p>\nRendement<\/h3>\n
Positionnement du portefeuille<\/h3>\n
\nJune 23, 2026<\/em><\/p>\n