Mackenzie Ivy International Equity
Mandate commentary
Q3 2026
Highlights
① The third quarter was marked by renewed geopolitical tension in the Middle East, which resulted in rising prices.
② Earnings growth provided a powerful tailwind for equities.
③ Inflation, energy costs pushed long-term yields higher.
Mandate overview
The fund continues to be managed with an objective of achieving attractive risk-adjusted returns over the long-term, with a particular emphasis on providing sound downside protection during turbulent market environments. We believe this should result in above-market returns on a through-cycle basis and help unitholders stay invested, thereby enabling them to earn the underlying returns of the fund. We aim to achieve this through a philosophy that is focused on owning high-quality businesses at reasonable valuations, exercising patience, discipline and intellectual humility in the investment process, while maintaining a long-term investment mindset.
Mandate: the portfolio underperformed the benchmark (MSCI EAFE) return during the quarter.
Performance contributors
Stock selection in financials, health care and information technology were the top contributors to relative performance over the quarter.
On a company-level basis, Deutsche Boerse, SAP and Sony Group were significant contributors to relative performance.
Performance detractors
Underweight allocation to financials and energy detracted from relative performance.
On a company-level basis, Compass Group, Infineon Technologies and Daikin Industries were the largest individual detractors from relative performance.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | since INC. (NOV. 14, 2016) |
MACKENZIE IVY INTERNATIONAL EQUITY | -0.16
| 2.08
| 2.10
| 13.25
| 4.39
| 6.10
|
Mandate positioning
Trading activity was rather muted during Q3; however, we did exit the fund’s positions in AutoTrader and Merck. Both were exited to fund other attractive opportunities within the portfolio.
We believe the fund’s current positioning, while generally defensive, is also balanced, in that there is healthy exposure to companies that stand to benefit from current structural tailwinds (for example – the AI infrastructure build-out) and attractive value in names that have been temporarily shunned by the market. The level of global macro and geopolitical volatility remains elevated and fast-changing; we have no way of predicting which direction things will turn in the near-term. Our aim is to construct a resilient and balanced portfolio, consisting of a diversified set of businesses that are well managed, well-resourced and are leaders in their industries.
Market overview: earnings growth provided a powerful tailwind for equities
The third quarter showed that the current business cycle still has support, but risks have shifted. Growth held up, earnings improved and corporate investment remained firm, but higher oil prices, persistent inflation and rising long-term yields made the path forward less certain. Equities advanced as earnings provided fundamental support, even as higher rates raised the bar for further gains.
Canadian equities benefited from gains in resources and financials. Higher oil prices supported energy, while precious-metals companies were among the strongest performers. Bank earnings were supported by capital-markets activity, trading income and contained credit costs. U.S. equities also advanced, supported by strong earnings and continued technology investment. Higher yields weighed on more rate-sensitive areas.
International markets remained constructive overall, with parts of Asia benefiting from continued demand across the AI technology supply chain. Fixed income faced greater pressure as rising government bond yields outweighed coupon income, while credit remained comparatively resilient. Across markets, the central tension increasingly became earnings strength versus higher inflation and interest rates.
Market outlook: inflation, energy costs pushed long-term yields higher
With the recent earnings strength, the bar for market performance is higher. U.S. valuations are at the upper end of their historical range and have come under pressure from higher bond yields. Investor sentiment points to strong earnings growth going-forward, which could support equities in the near term, but the magnitude of gains may be muted.
The U.S. Federal Reserve and Bank of Canada each face two rate decisions this year, and persistent inflation has shifted central banks toward a tighter policy stance. Long-term yields remain a pressure point for equities, while also improving the income available from bonds.
The U.S. midterms may add to market volatility, but the path forward will be shaped by the economic cycle, inflation and interest rates.
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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 September 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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