Investing Perspectives Q4 2025
A defining feature of 2025 was the speed of market reaction to policy signals, artificial intelligence (AI) narratives, and macro headlines, often well ahead of observable economic change. Trade-policy drafts moved asset prices, while shifting expectations around future central bank easing influenced valuations throughout the year.
In hindsight, 2025 may be remembered as much for what did not occur as for what did. There was no recession, no central bank rescue, and no systemic shock forcing a market reset. Instead, markets adjusted gradually to persistent policy uncertainty, structurally higher real interest rates, and ongoing geopolitical realignment. Investors appeared resigned to chronic risk, while pricing assets on the assumption that this risk would remain contained.
Equity returns remained highly concentrated. Technology stocks accounted for 44% of the S&P 500’s gains, while materials and financials drove 72% of the TSX Composite’s returns. Gold prices rose 65% over the year, powering a 143% increase in the TSX Global Gold Index.
AI remained the dominant market narrative, though leadership shifted slightly during the year, from investing in AI itself toward supplying the energy, utilities, and data infrastructure required to support it. Notably, this cycle spilled into hard assets and infrastructure far more quickly than prior technology waves, bringing permitting constraints and physical bottlenecks into focus.
Fixed income markets began to behave more as investors expect them to. Bonds once again offered meaningful income, albeit with periodic volatility. U.S. and Canadian government bond yields moved higher early in the year, reflecting resilient economic data, heavy government borrowing needs, and continued central-bank caution. As inflation eased without a sharp economic slowdown, yields retraced from mid-year highs and ended the year not far from where they began.
The takeaway for investors was straightforward: bonds did not deliver a smooth ride, but they again provided a real income cushion, a feature largely absent over the prior decade.
Canadian government bonds were less volatile than U.S. Treasuries, reflecting a more interest-sensitive domestic economy and a cautious central bank. U.S. bonds experienced sharper swings amid heavier issuance and broader fiscal concerns. In both markets, yields remained well above post-financial-crisis norms.
In the fixed income world, quality mattered. Higher-quality issuers delivered steady income, supported by strong balance sheets. Lower-quality and more highly leveraged borrowers were increasingly challenged by higher financing costs.
Investment Update
Against this backdrop, our equity and fixed income portfolios performed well, particularly given our limited mining (gold) exposure and disciplined, balanced portfolio construction.
The Bridgeport Canadian Equity Fund earned 21.4%* in 2025. Key contributors to performance were Cameco (+123%**), Saputo (+69%) and Toromont (+48%). Detractors included Constellation Software (-35%) and CGI Group (-19%), reflecting market concerns around the potential impact of AI on their business models.
The Bridgeport US Equity Fund gained 8.5% over the year, led by Alphabet (+65%), Applied Materials (+56%), Thermo Fisher (+38%) and L3 Harris (42%). These gains were partially offset by declines in Constellation Brands (-35%) and United Health (-33%).
The Bridgeport Small & Mid Cap Equity Fund was up 7.4%. Performance benefited from several holdings receiving buyout offers, including Dental Corp (+33%), Guardian Capital (+63%) and Parkland (+26%). Given the attractive valuations of several remaining holdings, we expect acquisition activity to continue to support returns in 2026.
The Thornmark Enhanced Equity Fund, renamed Bridgeport Multi-Asset Fund in the quarter, returned 7.5% in 2025. The Bridgeport Dividend & Income Fund (also renamed) gained 6.7%. Both funds benefited from exposure to several of the investments noted above.
The Bridgeport High Income Fund delivered a 7.5% return in 2025. As designed, current income—interest and dividends—was the primary driver of returns, providing a stable foundation throughout the year. Performance was supported by price appreciation in select corporate bonds as well as gains in Canadian bank equities and preferred shares. Looking ahead, the fund remains well‑positioned to deliver attractive risk‑adjusted returns, supported by a diversified mix of Canadian and U.S. high‑yield and investment‑grade credit, senior floating rate loans, preferred shares, and dividend‑paying equities.
Private asset investments, including income strategies to private equity and real estate, generated muted returns in 2025. Following strong gains coming out of the pandemic, returns have moderated recently as valuations adjusted to higher interest rates (particularly in private equity and real estate), slower growth and shifting government and trade policy. Transaction activity was unusually subdued but is expected to accelerate in 2026 and lead to higher future returns, a trend that began to emerge late last year. Within this context, Bridgeport Private Equity Opportunities, Private Real Estate & Infrastructure and Alternative Income Funds all generated returns between approximately 3% to 3.5%.
Final Thoughts
Being in the investment business, we would be remiss if we did not highlight that 2025 also marked the end of famed investor Warren Buffett’s active investment career. While he stepped down as Berkshire Hathway’s CEO at end of 2025, he remains as Chairman of the Board. His final annual letter offers a reflective perspective on a long career, with particular emphasis on the enduring importance of surrounding oneself with capable, principled, and high-integrity people. We encourage interested readers to read it (here).
We wish you and your families all the best in 2026! As always, please reach out with any questions.
Yours truly,
John Fisher
Notes
*Bridgeport fund investment returns disclosed in this report are before fees.
**All share price returns disclosed represent calendar year 2025 returns before dividends unless a share holding was initiated during 2025 in which case the share price return is calculated from the date of Bridgeport purchase.