Nicola Core Portfolio Fund
- December Return: +1.0%
- Q4 Return: +4.0%
- Year-to-Date Return: +10.8%
The portfolio is managed with similar weights to the model portfolio and consists entirely of Nicola Pooled Funds and Limited Partnerships. Client returns may vary based on individual asset mixes and specific circumstances.
Learn more about the Nicola Core Portfolio Fund.
Nicola Bond Fund
- December Return: +0.5%
- Q4 Return: 1.6%
- Year-to-Date Return: +8.5%
The Nicola Bond Fund outperformed the iShares Core Canadian Universe Bond Index ETF, which returned -0.7% for the month. The outperformance was primarily driven by the fund's short duration positioning and strong credit selection. Long-term Canadian government bond yields rose in December, mirroring U.S. Treasury yields amid expectations of more gradual interest rate cuts in 2025.
Looking ahead, we anticipate continued volatility in the investment-grade credit market, with increased primary market activity expected in January. The fund maintains its defensive positioning while preparing to add risk as opportunities arise.
Learn more about the Nicola Bond Fund.
Nicola High Yield Bond Fund
- December Return: +0.8% CAD / -1.9% USD
- Q4 Return: +3.2% CAD / -3.0% USD
- Year-to-Date Return: +10.7% CAD / +1.8% USD
The Nicola High Yield Bond Fund outperformed the iShares US High Yield Bond Index ETF (CAD-Hedged), which returned -0.6% for the month. Performance was driven by shorter duration positioning, defensive credit selection, and U.S. dollar exposure. The U.S. dollar appreciated 2.7% against the Canadian dollar in December.
High-yield bonds faced headwinds from rising U.S. Treasury yields, with the 10-year yield increasing by 0.4% to 4.6%. Credit spreads widened by 0.2% to 2.9%, with higher-quality BB-rated bonds outperforming lower-quality CCC credits. Canadian corporate hybrid positions and bank capital notes delivered notable returns, supported by higher all-in yields and limited domestic supply. The Nicola High Yield Bond Fund will continue focusing on higher-quality credits with favourable risk/reward characteristics given current spread levels are at the tighter end of the historical range.
Learn more about the Nicola High Yield Bond Fund.
Nicola Canadian Mortgage Fund
- December Return: +0.9%
- Q4 Return: +2.1%
- Year-to-Date Return: +8.2%
The Nicola Canadian Mortgage Fund delivered a positive return in December, funding three new loans during the month. As of December 31, the fund held 10.4% in cash and cash equivalents, with 77.3% of the direct loan portfolio secured by senior ranking mortgages.
Learn more about the Nicola Canadian Mortgage Fund.
Nicola U.S. Mortgage Fund
- December Return: +0.1% CAD / 0.0% USD
- Q4 Return: +1.5% CAD / +1.3% USD
- Year-to-Date Return: +4.4% CAD / +4.3% USD
Monthly returns reflected downward mark-to-market valuation adjustments to existing loans' book values, though these adjustments may not reflect the underlying credit quality. No new loans were funded in December, with six new loans scheduled for funding in the next 60 days. The fund held 32.4% in cash and cash equivalents at month-end, with 100% of the direct loan portfolio secured by senior ranking mortgages.
Learn more about the Nicola U.S. Mortgage Fund (USD).
Nicola Private Debt Fund
- December Return: +0.6% CAD / +0.5% USD
- Q4 Return: +2.3% CAD / +2.0% USD
- Year-to-Date Return: +8.9% CAD / +8.6% USD
The Nicola Private Debt Fund posted a positive return in December. Returns continue to be primarily driven by contractual cash interest income from the fund's diversified portfolio. The fund deployed US$35.8 million in December, including two new direct investments. Notable among these was a senior term loan to a provider of trenchless water/wastewater infrastructure rehabilitation products and services. The fund also realized three direct investments totaling US$14.9 million, including a US$12.5 million loan to a Vancouver-based designer and online retailer of home and office furnishings.
Learn more about the Nicola Private Debt Fund.
Nicola Canadian Equity Income Fund
- December Return: -3.2%
- Q4 Return: +1.1%
- Year-to-Date Return: +19.4%
The Nicola Canadian Equity Income Fund outperformed the S&P/TSX Composite Index by approximately 0.12% in December. Outperformance was primarily driven by positive security selection in Energy and Consumer Discretionary sectors. The fund's top-performing sectors were Consumer Discretionary, Consumer Staples, and Energy.
Top contributors during December were Aritzia, Gibson Energy, and Tourmaline, while TELUS, Shopify, and Suncor were the main detractors. The fund initiated a position in Secure Waste Infrastructure Corp, a provider of critical waste disposal and infrastructure services to the Canadian energy industry. At month-end, Canadian equities comprised 90.9% of the fund's assets.
Learn more about the Nicola Canadian Equity Income Fund.
Nicola U.S. Equity Income Fund
- December Return: +0.5% CAD / -2.2% USD
- Q4 Return: +8.3% CAD / +1.9% USD
- Year-to-Date Return: +24.9% CAD / +14.9% USD
The Nicola U.S. Equity Income Fund outperformed the S&P by 0.2% USD in December, driven by sector allocation and strong stock selection within Information Technology. Top contributors included Broadcom, Lululemon, and Visa, while Adobe, Electronic Arts, and UnitedHealth Group were the main detractors.
The fund initiated a position in L'Oreal, the global leader in beauty and personal care products. At month-end, the fund's delta-adjusted equity exposure stood at 97%, with 0% of long positions covered and 0% in notional put options. The fund maintained approximately 2% in uncollateralized cash.
Learn more about the Nicola U.S. Equity Income Fund (USD).
Nicola International Leaders Fund
- December Return: +0.2%
- Q4 Return: -0.8%
- Year-to-Date Return: +17.7%
The Nicola International Leaders Fund underperformed the MSCI ACWI ex-USA NTR Index (+0.8%) in December. Main contributors to performance were holdings in Health Care and France, particularly EssilorLuxottica, which benefited from improving organic growth prospects. ANZ Group was among the largest detractors, impacted by uncertainty surrounding their new CEO appointment. Learn more about the Nicola International Leaders Fund.
Learn more about the Nicola International Leaders Fund.
Nicola Global Small-Cap Equity Fund
- December Return: -0.1% CAD / -2.7% USD
- Q4 Return: -0.2% CAD / -6.1% USD
- Year-to-Date Return: +11.8% CAD / +2.9% USD
The Nicola Global Small-Cap Equity Fund outperformed the MSCI ACWI Small Cap NTR Index (-2.7%) in December. Patterson was a notable contributor following a takeover offer from Patient Square Capital, while German real estate holdings were among the main detractors due to rising yields.
Learn more about the Nicola Global Small-Cap Equity Fund.
Nicola Sustainable Innovation Fund
- December Return: -6.2% CAD / -8.7% USD
- Q4 Return: -8.0% CAD / -13.5% USD
- Year-to-Date Return: -0.2% CAD / -8.2% USD
2024 presented challenges amid political and policy uncertainty. The fund adapted by reducing exposure to carbon capture, carbon credits, hydrogen, and EV-related investments in light of potential policy shifts. Geographic diversification increased with reduced North American exposure and higher allocations to European markets. The fund enhanced its focus on energy management, efficiency, and digital infrastructure, particularly positioning for the growing power demands of Artificial Intelligence (AI) applications across various sectors including data centers, healthcare, and technology.
Learn more about the Nicola Sustainable Innovation Fund (USD).
Nicola Global Infrastructure Limited Partnership
- December Return: +0.4% CAD / -0.2% USD
- Q4 Return: +2.1% CAD / +0.7% USD
- Year-to-Date Return: +7.5% CAD / +5.5% USD
The Nicola Global Infrastructure Limited Partnership’s positive performance in December was driven by performance from secondaries portfolios. The Nicola Global Infrastructure Limited Partnership committed €15M to a French wholesale fibre network and US$5M to a diversified secondaries portfolio. Current AUM stands at C$422M, maintaining a 4% per annum distribution rate paid monthly.
Learn more about the Nicola Global Infrastructure Limited Partnership.
Nicola Private Equity Limited Partnership
- December Return: +1.6%
- Q4 Return: +6.1%
- Year-to-Date: +12.2%
The Nicola Private Equity Limited Partnership delivered a positive return in December. Returns were primarily driven by valuation increases in Johnvince Foods and FLC Co-Investment Fund V, partially offset by write-downs in VTrips and Project Malt. The LP made a new investment in a company specializing in third-party on-site maintenance services for data center equipment.
Learn more about the Nicola Private Equity Limited Partnership.
Nicola Venture Capital Limited Partnership
- December Return: +6.8% CAD / +0.5% USD
- Q4 Return: +6.8% CAD / +0.5% USD
- Year-to-Date: +18.8% CAD / +9.3% USD
The Nicola Venture Capital Limited Partnership delivered a positive return in December. Returns were primarily driven by valuation increases in Project Manhattan secondary investment and several primary fund investments. Project Manhattan returned C$2.3M during Q4, representing 20% of investment cost. The LP deployed C$4.3M into several primary fund investments during the quarter.
Learn more about the Nicola Venture Capital Limited Partnership.
Nicola Global Real Estate Fund
- December Return: -2.5%
- Q4 Return: -0.3%
- Year-to-Date Return: +6.6%
The Nicola Global Real Estate Fund outperformed the iShares S&P/TSX Capped REIT Index, which returned -6.1% for December and -2.4% year-to-date. Outperformance in Q4 was primarily attributed to the fund's global focus, as U.S. and International REITs outperformed domestic REITs. The sector continues to show relatively strong fundamentals with mid-single-digit cash flow growth and healthy discounts to NAVs.
Learn more about the Nicola Global Real Estate Fund.
Nicola Canadian Real Estate Limited Partnership
Nicola Canadian Real Estate LP NAV per unit has decreased to $151.0489 (previously $151.3711), effective trade date October 31, 2024. This represents a decrease of 0.2% and a positive return for September of 0.1%.
Learn more about the Nicola Canadian Real Estate Limited Partnership.
Nicola U.S. Real Estate Limited Partnership
Nicola US Real Estate LP NAV per unit has decreased to US$183.1482 (previously US$183.5348), effective trade date December 31, 2024. This represents a decrease of 0.2% and a positive return for November of 0.2%.
Returns were positive this month, primarily due to an increase in appraised values for office assets in Seattle and the appraisal and partner buyout of a completed development asset in Las Vegas. Actual YTD return as at November 30, 2024 is -0.9%. Portfolio Leverage is 49.48%.
Learn more about the Nicola U.S. Real Estate Limited Partnership (USD).
Nicola Value Add Real Estate Limited Partnership
Nicola Value Add Real Estate LP NAV per unit has decreased to $251.0336 (previously $251.2009), effective trade date November 30, 2024. This represents a decrease of 0.1% and a negative return for November of 0.1%. In November, NVARELP funded $1.1M for two new projects in the Nicola Multi Family Venterra LP and $7.6M for existing projects.
Learn more about the Nicola Value Add Real Estate Limited Partnership.
Disclaimer
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information presented here has been obtained from sources believed to be reliable, but not guaranteed. Returns are quoted net of fund/LP expenses but before Nicola Wealth portfolio management fees. Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances. Nicola Wealth Management Ltd. (Nicola Wealth) is registered as a Portfolio Manager, Exempt Market Dealer, and Investment Fund Manager with the required securities’ commissions. This is not a sales solicitation. This investment is generally intended for tax residents of Canada who are accredited investors. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. Comparisons of the historical performance of Nicola Wealth funds or models to the historical performance of indexes, mutual funds or other investment vehicles should only be undertaken with consideration of the differences that exist between the underlying investments that comprise the compared investment vehicles. Indexes may be primarily composed of a single asset type/asset class (i.e. 100% equities or 100% bonds) whereas Nicola Wealth funds may or may not contain a combination of exchange-traded equities, marketable bonds, private investments, other alternative investment classes and exempt products. When making any comparison of historical performance, these differences and their impact on the performance of each comparable should be taken into account. ETF’s are pooled funds that track a specific investment universe that is expressed by a market index or a basket and that is listed on an exchange. Unlike a market index, an ETF incurs trading costs and other charges, including taxes. Because of these incurred costs, an ETF may underperform the market index that it tracks. ETF returns stated in this material are based on NAVs and are stated net of fees and other costs, including transaction costs. For a complete listing of Nicola Wealth Real Estate portfolios, please visit https://realestate.nicolawealth.com. All values sourced through Bloomberg. Effective October 31, 2023, Nicola Balanced Mortgage Fund changed its name to Nicola Canadian Mortgage Fund. Effective January 1, 2024, Nicola Infrastructure and Renewable Resources Limited Partnership changed its name to Nicola Global Infrastructure Limited Partnership.
