Mackenzie North American Value Equity
Mandate commentary
Q1 2025
Highlights
① Positive returns for the mandate outperformed the benchmark. Stock selection in consumer discretionary and industrials contributed positively. Positive stock selection in Canadian financials and U.S. consumer staples further contributed.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Mandate overview
Performance was positive over the period and outperformed the benchmark. The Canadian market outperformed the U.S. market this past quarter (in local currency terms). Positive stock selection in the financials and industrials sectors in Canada contributed positively to returns relative to the benchmark. An underweight exposure to the information technology sector in Canada also contributed positively to returns.
In the U.S., positive stock selection in the consumer discretionary, consumer staples and health care sectors contributed positively to returns relative to the benchmark. This was slightly offset by negative stock selection in the materials sector.
Mandate: Positive returns outperformed the benchmark.
Performance contributors
Positive stock selections in the Canadian financials and industrials sectors had the highest contributions to relative performance.
Positive stock selection in the U.S. consumer discretionary, consumer staples and health care sectors contributed positively to relative performance.
Performance detractors
Negative stock selection in the Canadian materials sector was the only notable detractor from relative performance.
Negative stock selection in the U.S. materials sector also detracted from relative performance.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
SINCE INC. (NOV. 14, 2016) |
MACKENZIE NORTH AMERICAN VALUE EQUITY |
3.40%
|
3.40%
|
14.54%
|
8.64%
|
17.16%
|
9.38%
|
Mandate repositioning
The mandate modestly added to its existing positions in Alimentation Couche-Tard Inc. and initiated a new position in CRH Plc.
The mandate trimmed its positions in Canadian Pacific Kansas City Ltd. and Toronto Dominion Bank.
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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