Mackenzie Ivy International Equity
Mandate commentary
Q2 2026
Highlights
① The mandate returned 7.8%, underperforming the MSCI EAFE Index by 3.05 percentage points, with financials and IT stock selection detracting.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
International developed equities rebounded strongly during the second quarter, with the MSCI EAFE Index returning 10.8% in U.S. dollar terms. Improving risk appetite, resilient corporate results and better manufacturing indicators supported markets. Leadership was concentrated in information technology and financials, while energy declined. Regionally, Japan returned 14.2%, Europe gained 10.9% and Asia/Pacific ex Japan advanced 3.7%.
Benchmark-relative performance was primarily constrained by security selection. Financials and information technology were the largest sector detractors, while industrials also weighed on relative returns. Stock selection in Japan and Europe detracted. These effects were partially offset by the mandate’s absence of exposure to energy and positive stock selection in Asia/Pacific (excluding Japan).
Mandate: Mackenzie IVY International Equity portfolio stock review
Performance contributors
Infineon Technologies was the largest issuer-level contributor, adding approximately 1.51%. The company raised its full-year outlook, amid strong demand for power semiconductors used in artificial intelligence data centres, and signs of a broader cyclical upturn.
Taiwan Semiconductor Manufacturing was one of the mandate’s largest security contributors. The out-of-benchmark holding benefited from strong demand for leading-edge process technologies, while the company reported first-quarter revenue growth of 35.1% year over year and a 58.3% increase in net income and earnings per share.
Performance detractors
The mandate’s lack of exposure to ASML was the single largest security-level detractor. The semiconductor-equipment company rallied after reporting €8.8 billion in first-quarter sales and raising its 2026 sales outlook.
Deutsche Börse was one of the mandate’s largest financials detractors. The holding declined while the benchmark financials sector advanced sharply, contributing to the negative stock-selection effect within the sector.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | since INC. (NOV. 14, 2016) |
MACKENZIE IVY INTERNATIONAL EQUITY | 7.77
| 2.24
| 4.25
| 9.93
| 3.50
| 6.28
|
Mandate repositioning
During the quarter, the mandate added to Novartis, Schneider Electric and Spirax, among others. It trimmed Merck KGaA, Taiwan Semiconductor Manufacturing and Terumo, and exited its position in Kone.
At quarter-end, the largest overweight sectors were consumer discretionary, health care, industrials and information technology. Financials remained the largest underweight sector, while the portfolio continued to have no exposure to energy, utilities or real estate.
The portfolio remains positioned in line with the Ivy investment philosophy, emphasizing high-quality businesses with durable competitive advantages, strong balance sheets and attractive long-term growth characteristics. The strategy remains focused on quality, downside protection and long-term compounding, rather than short-term benchmark alignment.
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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