CGI Delivers Strong Returns But Trails Hot TSX Amid Strategic Shifts

TORONTO, Canada – March 04, 2026 – Canadian General Investments, Limited (CGI) delivered robust returns to its shareholders over the past year, yet a closer look at its latest performance update reveals a nuanced story of strategic repositioning in a surging market. The investment firm reported a strong 12-month share price return of 35.3% with dividends reinvested, a figure that undoubtedly pleased investors. However, its underlying net asset value (NAV) per share, while growing an impressive 29.9% over the same period, trailed the blistering 38.8% total return of its benchmark, the S&P/TSX Composite Index.

In its unaudited update for the period ending February 28, 2026, CGI reported a NAV per share of $86.97. The year-to-date NAV return stood at 8.2%, also slightly behind the benchmark's 8.6%. This performance gap, coupled with a deliberate reduction in the company's use of leverage, paints a picture of a fund capitalizing on market strength while prudently managing risk for the road ahead.

Shareholder Gains Outpace Asset Growth

One of the most compelling narratives within CGI’s latest report is the divergence between its share price performance and its NAV growth. A 12-month share price return of 35.3% significantly outstripping the 29.9% NAV return points to a classic and positive dynamic for a closed-end fund: a narrowing of the discount to NAV. This suggests that while the fund's underlying assets didn't grow as fast as the broader market, investor confidence in CGI's management and strategy has strengthened considerably.

Investors, seeing value in the fund's portfolio and strategy, were willing to bid up the share price closer to its intrinsic value. This vote of confidence from the market is a crucial metric, reflecting positive sentiment about the fund's future prospects. While trailing a hot benchmark is never ideal, the strong shareholder return indicates that investors are rewarding the fund's steady hand and long-term approach.

A Portfolio Built for the Canadian Economy

CGI’s investment strategy is clearly reflected in its portfolio composition, which reads like a cross-section of the Canadian economy's core strengths, supplemented by strategic bets on global growth trends. The fund’s heaviest allocations are in Industrials (20.9%), Materials (19.0%), Energy (17.0%), and Information Technology (16.5%).

This allocation proved beneficial as the Canadian market was largely propelled by a surge in materials and energy prices through 2025 and into 2026. CGI was well-positioned to ride this wave with top holdings like precious metals giant Franco-Nevada Corporation (5.5%) and uranium producer Cameco Corporation (3.6%).

Furthermore, the fund's significant 16.5% weighting in Information Technology, which includes a 4.0% stake in global AI powerhouse NVIDIA Corporation, demonstrates a forward-looking strategy. CGI’s long-term position in NVIDIA, held since 2016, paid off handsomely as the chipmaker reported record-breaking earnings in late February. This single holding was a significant contributor to returns, showcasing management's ability to identify and hold long-term global winners. The top ten holdings, which also include Celestica Inc., Canadian Pacific Kansas City Limited, and Royal Bank of Canada, comprise 35.6% of the portfolio and represent a blend of domestic industrial might and international technological leadership.

A Prudent Pivot: De-leveraging in a Hot Market

Perhaps the most telling strategic move highlighted in the report is CGI's continued reduction of leverage. The fund's leverage, achieved through bank borrowing to amplify returns, stood at 11.0% of net assets as of February 28, 2026. This is a notable decrease from 11.9% at the end of 2025 and 14.1% a year prior.

In a market that has delivered such powerful gains, the decision to de-leverage is a significant one. While borrowing can magnify profits during bull runs, it also magnifies losses in a downturn. By methodically reducing its reliance on borrowed funds, CGI's management appears to be taking a more conservative stance, choosing to lock in some gains and reduce the fund's overall risk profile. This move aligns with analyst commentary that has pointed to the fund’s “conservative leverage” as a key component of its “solid financial resilience.”

This prudent pivot can be interpreted as a tactical decision to protect shareholder capital after a period of strong growth, signaling a belief that market conditions may become more volatile. It provides a larger cushion against potential market corrections and positions the fund with the flexibility to potentially increase leverage again should new, compelling opportunities arise.

Navigating a Surging Market

To fully appreciate CGI's performance, it must be viewed against the backdrop of the S&P/TSX Composite Index's extraordinary run. The benchmark's 38.8% 12-month return was fueled by a confluence of highly positive factors. Rising gold prices and a strong energy sector buoyed the resource-heavy index, while Canada's major banks posted strong earnings following earlier interest rate cuts.

Moreover, the Canadian market benefited from a global rotation as some investors sought to diversify away from a U.S. market highly concentrated in a handful of technology mega-caps. This perfect storm created an exceptionally high bar for active managers to clear. In this context, CGI's 29.9% NAV return, while trailing the index, remains a formidable achievement on an absolute basis.

The story of CGI in early 2026 is one of balancing impressive growth with disciplined risk management. The fund has successfully capitalized on strong market trends through its core holdings while its shareholders have been rewarded with both strong returns and growing market confidence. By trimming leverage, management is sending a clear signal that preserving capital is as important as generating it, a strategy that may prove invaluable in the months to come.