Franklin ClearBridge Canadian Equity
Mandate commentary
Q2 2026
Highlights
① The mandate returned 5.96%, underperforming the S&P/TSX Composite Index by 0.99 percentage points. Positive selection in materials was offset in other sectors.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
Canadian equities advanced during the second quarter, with the S&P/TSX Composite Index posting its eighth consecutive quarterly gain. Financials led the market, supported by strong performance from Canadian banks and improving investor sentiment around capital levels, credit quality and potential returns on equity. Health care, industrials, consumer discretionary and real estate also outperformed the broader index, while materials, communication services and energy declined.
Relative underperformance was driven primarily by negative security selection, while sector-allocation effects were neutral. Industrials, financials, information technology, communication services and real estate detracted, partly offset by a significant positive contribution from an underweight to materials.
On an absolute basis, holdings in financials, industrials, consumer staples and utilities contributed positively. These gains were partly offset by weakness in materials and energy. The portfolio maintained a high-conviction approach, with its top 25 holdings representing more than 70% of assets.
Mandate: Franklin ClearBridge Canadian Equity stock review
Performance contributors
The portfolio’s lack of exposure to Kinross Gold contributed positively to relative performance, as the company declined alongside weakness in the materials sector. The mandate also benefited from its broader underweight allocation to the underperforming sector.
The portfolio’s lack of exposure to Barrick Mining also contributed positively, as lower gold prices weighed on precious-metals equities. Additional support came from the mandate’s positive security selection within materials.
Performance detractors
CGI detracted from relative performance, contributing to the negative security-selection effect within information technology.
Boyd Group Services also detracted, contributing to weaker stock selection within industrials during the quarter.
Total gross returns:
Total return (CAD) | QTD | YTD | 1YR | 3YR | 5YR | since INC. (NOV. 14, 2016) |
FRANKLIN CLEARBRIDGE CANADIAN EQUITY | 5.96
| 8.73
| 21.59
| 17.57
| 13.64
| 11.22
|
Mandate repositioning
Trading activity remained elevated during the quarter as strong market returns, significant sector dispersion and stock-specific volatility created opportunities to reallocate capital. Additions were concentrated in industrials, information technology and real estate, including out-of-favour cyclical companies and businesses whose share prices were affected by perceived artificial-intelligence disruption risks.
At quarter-end, the mandate’s largest sector exposures were financials, industrials, energy and materials. Relative to the benchmark, the mandate is primarily overweight industrials and consumer staples and most underweight financials and materials.
The mandate remains focused on high-conviction opportunities where share-price weakness may reflect an overly broad assessment of disruption risk.
Market overview: earnings strength helped markets absorb uncertainty
The second quarter of 2026 reinforced the resilience of financial markets. Investors faced conflict in the Middle East, commodity-price volatility, shifting interest-rate expectations and renewed inflation concerns, yet global equities continued to advance as corporate earnings and economic activity remained stronger than expected. The S&P 500 gained 14.9% in U.S.-dollar terms for the quarter, while the S&P/TSX Composite Index advanced 6.4%, supported by healthier earnings expectations and improving market breadth.
Canadian equities were led by a strong rebound in financials, as better-than-expected bank earnings, resilient credit quality and improved capital markets activity lifted sentiment. U.S. equities were supported by earnings strength rather than a simple risk-on rally, with Information Technology leading as AI infrastructure spending continued to anchor sentiment. International equities also contributed meaningfully, with emerging markets Korea and Taiwan benefitting from demand across the global technology supply chain.
Market outlook: valuations and rates make selectivity more important
Markets enter the second half of 2026 with fundamentals remaining broadly supportive, although elevated equity valuations leave less room for error. Earnings growth is likely to remain the key driver of returns, while inflation trends, central bank policy and interest-rate expectations will continue to shape market sentiment.
Across asset classes, diversification remains important. Canadian, international and emerging market equities offer exposure to distinct sources of growth, while higher yields in fixed income continue to provide a cushion against volatility. Selectivity remains key as investors balance opportunities against valuation and policy risks.
To discuss your investment strategy, speak to your IG Advisor.
Azure Managed Investments™ provides discretionary investment management services distributed by IG Wealth Management Inc., Investment dealer. We will manage your Azure Managed Investments Accounts on a segregated basis in accordance with your investment policy statement and the resulting mandate selected by you. Mandates will be managed by I.G. Investment Management, Ltd. and partner organizations. You are required to make a minimum initial investment of $150,000; please read the Azure Managed Investment Account Agreement for complete details, including fees and expenses.
This commentary may contain forward-looking information, which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 30, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised, whether as a result of new information, changing circumstances, future events or otherwise.
This commentary is published by IG Wealth Management. It is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. It may contain certain forward-looking statements regarding the market conditions which are based upon assumptions believed to be reasonable at the time of publishing. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Past performance may not be repeated and is not indicative of future results. Actual performance may vary due to a range of factors including but not limited to current market conditions, timing of contributions and withdrawals, client-imposed restrictions, fees, expenses, tax considerations and other individual circumstances. There are no assurances that any mandate will achieve its objectives and/or avoid any losses.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
©2026 IGWM Inc.