Mackenzie Ivy International Equity
Mandate commentary
Q1 2025
Highlights
① Stock section in the consumer discretionary sector was the single largest contributor to relative performance.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Mandate overview
Performance was positive but underperformed the benchmark. An underweight allocation to the financial sector, along with an overweight allocation to information technology, detracted from relative performance. Stock selection in the consumer discretionary, consumer staples, financials and information technology sectors positively impacted performance relative to the benchmark, effectively offsetting areas of relative underperformance. The energy and financial sectors were top performers this quarter. The mandate’s relative performance was negatively impacted by an underweight allocation to these sectors.
Mandate: Positive returns that underperformed the benchmark.
Performance contributors
Stock selection in the consumer discretionary, consumer staples, financials and information technology sectors positively contributed to relative performance.
Stock selection in Japan contributed to relative performance.
Performance detractors
Underweight allocations to the financials and energy sectors, along with an overweight allocation to the information technology and consumer discretionary sectors, detracted from relative performance.
Currency exposure in Europe relative to the Canadian dollar detracted from relative performance.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
since INC. (NOV. 14, 2016) |
MACKENZIE IVY INTERNATIONAL EQUITY |
4.60%
|
4.60%
|
10.18%
|
4.99%
|
8.44%
|
4.93%
|
Mandate repositioning
During the quarter, the mandate added a position in a European health care company.
The mandate did not exit any positions during the quarter.
The mandate added to existing positions in Hoya Corporation, InterContinental Hotels, Coloplast, l’Oreal and Daikin Industries.
The mandate trimmed its positions in Bandai Namco, SAP SE, Nomura Research, Admiral Group, Deutsche Boerse and Nestle.
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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