During the second quarter of 2026, global equity markets rebounded strongly from the volatility experienced late in the first quarter. The CSS Balanced Fund returned 7.8%, while the Equity Fund gained 12.1% and the Bond Fund returned 2.7%. Performance was supported by broad equity-market strength, particularly in emerging markets and U.S. small-cap equities.
Global financial markets recovered strongly during the second quarter as concerns surrounding the conflict in the Middle East eased and investors became increasingly optimistic about the global economic outlook. While geopolitical tensions remained elevated, fears of prolonged disruptions to global energy supplies diminished as the quarter progressed, allowing investor attention to shift back toward corporate earnings and long-term growth opportunities.
Artificial intelligence (AI) remained one of the defining investment themes during the quarter. However, leadership broadened beyond the largest U.S. technology companies as investors increasingly rewarded businesses supplying the infrastructure required to support AI, including semiconductor manufacturers, memory-chip producers and companies involved in data centre expansion. This broader participation helped fuel strong equity returns across many regions and sectors.
Emerging markets delivered the strongest returns of the major equity regions, led by technology-heavy markets such as Taiwan and South Korea. Continued investment by large technology companies in AI infrastructure drove strong demand for advanced semiconductors and memory chips, benefiting many Asian manufacturers. U.S. small-cap companies also performed well as investor confidence broadened beyond the largest companies in the market.
Canadian equities generated positive returns but trailed many global markets, reflecting the Canadian market's relatively small technology sector and larger exposure to financials, energy and materials. The Canadian dollar weakened modestly against the U.S. dollar during the quarter, which modestly increased the value of many foreign investments when translated back into Canadian dollars. Because the Plan hedges a portion of its foreign currency exposure, the overall impact on Fund returns was limited.
Fixed-income markets also delivered solid positive returns during the quarter. While central banks remained cautious and largely left policy interest rates unchanged, longer-term government bond yields declined modestly as inflation pressures continued to ease and investors grew more confident that interest rates were approaching a peak. Combined with the steady income generated from bond coupons, this provided a favourable environment for high-quality fixed-income investments.
Read the full Q2 2026 Quarterly Investment Report