Mackenzie Canadian Dividend Equity
Mandate commentary
Q1 2025
Highlights
① Positive returns for the mandate. Positive stock selection in the financials sector and an underweight position in information technology led to outperformance against the benchmark.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Mandate overview
The mandate performed positively over the period and outperformed its benchmark index. The broader Canadian market had very moderate returns in the quarter. Positive stock selection in the financials and energy sectors contributed positively to returns relative to the benchmark. An underweight position in the information technology sector was also a major contributor to relative returns. This was somewhat offset by an underweight position in the materials sector.
Mandate: Overall positive returns outperformed the benchmark.
Performance contributors
Positive stock selection in the financials and energy sectors contributed positively to relative performance over the period.
Performance detractors
An underweight position in and negative stock selection in the materials sector detracted from relative performance over the period.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
since INC. (NOV. 14, 2016) |
MACKENZIE CANADIAN DIVIDEND EQUITY |
3.20%
|
3.20%
|
11.83%
|
6.44%
|
15.10%
|
8.52%
|
Mandate repositioning
The fund added to its existing positions in Arc Resources and Cenovus Energy.
The fund further trimmed its position in Telus Corporation.
Market overview: increased uncertainty in U.S. markets favoured international equities
Investor sentiment turned cautious in the first quarter of 2025, driven by heightened market uncertainty following significant shifts in U.S. trade policy under President Trump. Abrupt tariff changes targeting major trade partners — notably Canada, Mexico and China — increased volatility and pressured equity market performance, particularly affecting the S&P 500 Index. In contrast, European markets outperformed significantly, reflecting investors' preference for Europe's attractive valuations and perceived stronger growth potential.
Despite trade-related headwinds, global manufacturing activity showed resilience, signalling potential earnings growth ahead, provided trade tensions stabilize. Central banks diverged in response: the Bank of Canada proactively lowered its overnight rate to 2.75% to bolster growth amid trade uncertainties, while the U.S. Federal Reserve maintained its rate at 4.5%, viewing tariff-related inflation impacts as temporary.
Market outlook: U.S. tariff concerns may temper earning expectations.
Looking ahead, we remain optimistic, despite recent market volatility and lingering uncertainties. While U.S. equities have faced challenges, including a pullback from February highs and sensitivity to tariff concerns, other regions, such as Canada, Europe and emerging markets, offer compelling opportunities. These regions have shown resilience, supported by stronger fundamentals and more attractive valuations compared to U.S. markets. As long as unemployment remains low, consumption is expected to continue at a steady pace, supporting economic growth. Despite short-term turbulence, global opportunities continue to emerge, and maintaining a long-term perspective will be key to navigating this market volatility.
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