Mackenzie Canadian Dividend Equity
Mandate commentary
Q2 2024
Highlights
① Negative returns from stocks in the industrials and materials sectors led to negative performance.
② U.S. equities driven by technology and telecoms sectors.
③ Consumer spending has plateaued, and economic growth has normalized.
Mandate overview
The mandate underperformed its benchmark index and had negative returns over the period. The broader Canadian market was generally weaker in the quarter. Stock selection in the industrials and materials sectors contributed negatively to performance relative to the benchmark.
Stock selection in the financials sector also negatively impacted the mandate’s relative performance.
Mandate: negative returns underperformed the benchmark
Performance contributors
Stock selection in the utilities sector had a slight positive contribution to relative performance over the period.
Performance detractors
Stock selection in the industrials sector was the largest detractor to relative performance over the period.
Stock selection in the materials and financials sectors also detracted from performance relative to the benchmark.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
since INC. (NOV. 14, 2016) |
MACKENZIE CANADIAN DIVIDEND EQUITY |
-2.10% |
3.59% |
8.98% |
7.18% |
8.07% |
7.51% |
Mandate repositioning
During the period, the fund did not initiate any new positions.
The fund added to existing positions in Cenovus Energy Inc. and TD Bank, among others.
The fund trimmed its position in Pembina Pipeline Corporation.
Market overview: AI pushed equity growth while central banks started to pivot
The second quarter continued to be dominated by the growing influence of artificial intelligence, with investors focused on opportunities in AI-enabled businesses and hardware. Additionally, there was a notable shift in monetary policy as some central banks adjusted their interest-rate policies as inflation risks receded.
In Canada, year-over-year inflation dropped to 2.9%, while in the U.S. it fell to 3.3%. Both indicators are trending downward and remain range bound. The Bank of Canada was the first among central banks in the G7 to cut its overnight lending rate, which we view not as a divergence in monetary policy, but rather as a precursor to the U.S. Federal Reserve eventually following suit. The European Union also cut rates modestly, while the Bank of England held rates as-is, for now. In our view, Canada and Europe have an increased risk of an economic slowdown, while U.S. and emerging market (EM) economic conditions appear to be improving. Canadian and international equities may be weighed down by slower economic growth and potentially weaker earnings growth, with limited valuation upside
Market outlook: global economic conditions remain favourable
We believe interest rates at central banks have peaked, with Canada and the European Union lowering rates ahead of the U.S. Federal Reserve. The economic outlook shows signs of levelling out compared to three months ago, as unemployment ticked higher and consumer spending plateaued. The summer months may bring heightened headline risk surrounding the U.S. presidential election, but seasonality and historical data suggest equity markets are typically positive heading into the fall.
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