Guardian Capital Global Dividend
Mandate commentary
Q2 2025
Highlights
① The mandate underperformed its benchmark, the MSCI World Index, during the quarter. The portfolio’s high-quality bias and balance between secular growth and low economic sensitivity, coupled with the strategy’s dividend quality requirement and international exposure, has been a source of relative strength.
② Equities staged a sharp V-shaped recovery after tariff reversal.
③ Investors look ahead to trade-policy clarity.
Mandate overview
The mandate’s underperformance this quarter was due to negative sector allocation and stock selection. Health care was the largest detractor, driven by a slight overweight position in and poor performance from UnitedHealth, which was sold during the quarter. An overweight position in the consumer staples sector also detracted, despite strong results from Costco. An underweight position in the communication services sector also detracted, though partially offset by strong performance from Meta. The overweight position in the energy sector was another drag. In the consumer discretionary sector, weak stock selection was mainly due to underperformance from McDonald’s. Industrials companies like Republic Services, Waste Management and Wolters Kluwer also underperformed in the sector. In contrast, AXA and RBC outperformed within the financials sector. Information technology detracted overall due to an underweight positioning in the sector, but stock selection was positive, led by Broadcom and Microsoft. This helped to offset weaker performance from Accenture and the absence of Nvidia.
Mandate: Guardian Capital Global Dividend portfolio stock review
Performance contributors
Broadcom was a top contributor this quarter. In addition to the rebound in information technology stocks, the company delivered strong quarterly results, driven primarily by growth in its businesses related to artificial intelligence (AI).
Williams Companies was the second-best position this quarter. Williams posted earnings that beat estimates. In addition, the company is actively expanding its infrastructure, which supports their revenue and earnings growth outlook.
Performance detractors
UnitedHealth was the weakest position this quarter. The sharp sell-off followed a disappointing earnings report, the withdrawal of forward guidance, and a CEO shake-up that shook investor confidence.
Republic Services detracted from relative performance despite posting earnings above expectations. Revenues, however, came in just below forecasts due to lower volumes and adverse weather that offset higher pricing and cost-cutting efforts.
Total gross returns:
Total return | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
GUARDIAN CAPITAL GLOBAL DIVIDEND | 6.70%
| 1.87% |
Mandate repositioning
The portfolio management team believes that in this current macro economic environment, profitability, stability and safety need to be embraced, so they focus the portfolio on companies with positive earnings growth coupled with strong dividend growth. The portfolio management team exited UnitedHealth, as the company was facing headwinds from rising medical costs, legal risks and regulatory scrutiny, which materially impacted its earnings growth expectations. The portfolio management team bought Motorola Solutions and Darden Restaurants. Motorola offers stable cash flow from its Land Mobile Radio business, supporting growth in higher-margin software segments. Darden continues to deliver strong revenue growth and profit margins through cost control and operational efficiency, despite industry cost pressures. The mandate has overweight positions in the energy, industrials, financials and consumer staple sectors and underweight positions in the communication services, consumer discretionary and information technology sectors. Regionally, the strategy has approximately 27% weight in Europe, 71% weight in North America and 2% weight in Asia.
Market overview: volatility gripped global markets during "Liberation Day" fallout
The second quarter of 2025 served as a stark lesson in the market’s ability to absorb sharp, politically driven shocks. The period was dominated by the U.S. administration's chaotic trade policy, beginning with the April announcement of sweeping tariffs, which sent global equities into a tailspin. The S&P 500 Index plunged into correction territory, marking its most significant retreat since March 2020.
This initial panic sent investors fleeing to safe havens, a move clearly reflected in the 5.7% surge in gold prices this quarter. However, the administration’s subsequent and rapid reversal of the policy triggered an equally dramatic V-shaped recovery. The initial fear that gripped the market evaporated, and major equity indices charged back into positive territory
Throughout this turbulence, central banks remained on the sidelines. The U.S. Federal Reserve (the Fed) and the Bank of Canada (BoC) held rates steady, caught between the inflationary threat of tariffs and the risk of a corresponding economic slowdown.
Market outlook: solid reasons for optimism, despite ongoing uncertainty
The world is rarely free of turmoil. Over the past five years, the world economy has faced a global pandemic, multi-decade inflation highs, aggressive interest rate hikes and significant international conflicts. Yet, despite these challenges, markets have demonstrated resilience as businesses adapt, consumers adjust, and economies discover new pathways to growth.
Looking ahead, trade policy clarity and its influence on corporate earnings will be key drivers of market sentiment. Attractive equity valuations and the potential for mid-teens earnings growth provide reasons for optimism, though uncertainty around policy and geopolitical risks remains a headwind. Central banks are expected to shift toward more accommodative monetary policy, with rate cuts anticipated in some regions. This could support economic growth while stabilizing markets, particularly in fixed income.
Persistent volatility may weigh on sentiment in the near term, especially in areas more exposed to trade tensions. However, as these risks moderate, the outlook should improve, with opportunities emerging in sectors poised to benefit from easing uncertainty. It’s important to remember that volatility, while challenging, can also create opportunities.
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