Mackenzie Canadian Core Fixed Income
Mandate commentary
Q2 2026
Highlights
① The mandate returned 1.69%marginally outperforming the FTSE Canada Universe Bond Index by 0.04 percentage points since inception, as government bond positioning offset corporate credit contributions.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
The U.S. economy continued to benefit from substantial investment in artificial intelligence infrastructure, including data centres, power generation and semiconductors. Employment growth slowed but did not develop into broad-based layoffs, keeping recession risks contained. Inflation remained persistent, and the U.S. Federal Reserve held interest rates steady. Its June communications and projections prompted markets to shift from anticipating rate cuts to considering renewed tightening.
Canada’s economy improved from a weak starting point but remained softer than the United States. April GDP increased 0.5%, employment recovered in May and unemployment declined to 6.6%. The Bank of Canada maintained its policy rate at 2.25%, balancing improved near-term activity against labour-market slack, mortgage-reset pressures, declining business investment and continued trade uncertainty.
Corporate credit exposure contributed positively to returns, led by financials, energy and infrastructure issuers. Government bond positioning detracted as the positive contribution from provincial bonds was more than offset by the portfolio’s lower exposure to federal government bonds.
Mandate: Mackenzie Canadian Core Fixed Income overview
Performance contributors
Corporate credit was the primary source of positive relative performance. Canadian credit markets remained resilient despite interest-rate volatility, supported by attractive all-in yields and generally sound issuer fundamentals. Financials, energy and infrastructure issuers contributed positively, benefiting from solid earnings, healthy cash generation and stable credit spreads.
Provincial government bond exposure also contributed positively to returns.
Performance detractors
Government bond positioning detracted from relative performance. The positive contribution from provincial bonds was outweighed by the portfolio’s lower exposure to federal government bonds, which benefited as yields declined amid softer economic growth expectations.
Selected Industrial and real estate corporate bonds also underperformed, while cash holdings were a modest detractor during a broadly positive quarter for fixed income.
Total gross returns:
Total return (CAD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
MACKENZIE CANADIAN CORE FIXED INCOME | 1.69
|
Mandate repositioning
At quarter-end, the mandate remains positioned with 54% in government bonds, 44% in corporate credit and the remaining balance in cash. Relative to the benchmark, the portfolio maintains higher corporate credit exposure and lower government bond exposure. Duration remains broadly aligned with the benchmark at 6.8 years.
Softer Canadian economic conditions, relative to the stronger U.S. backdrop, may provide the Bank of Canada with room to ease monetary policy. Labour-market weakness, declining business investment, mortgage-reset pressures and continued trade uncertainty remain important considerations. The outlook anticipates a 25-basis-point policy-rate reduction before year-end.
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.
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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.
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