Mackenzie North American Value Equity
Mandate commentary
Q2 2024
Highlights
① The mandate had slight positive returns. Negative stock selection in the materials sector and in the Canadian information technology and industrials sectors contributed to overall underperformance against the broad benchmark.
② U.S. equities driven by technology and telecoms sectors.
③ Consumer spending has plateaued, and economic growth has normalized.
Mandate overview
Performance was slightly positive over the period and underperformed the benchmark index. The U.S. market outperformed the Canadian market this past quarter. Positive stock selection in the consumer staples and financials sectors in the U.S. contributed positively to returns relative to the benchmark. This was offset by negative stock selection in the materials sector.
In Canada, stock selection in the consumer discretionary sector contributed positively to returns relative to the benchmark. This was offset by negative stock selection in the financials, industrials and information technology sectors.
Mandate: slight positive returns underperformed the benchmark
Performance contributors
Positive stock selection in the Canadian consumer discretionary sector contributed to relative performance.
Positive stock selection in the U.S. consumer staples and financials sectors contributed to relative performance.
Performance detractors
Negative stock selection in the Canadian financials, industrials, information technology and materials sectors detracted from relative performance.
Negative stock selection in the U.S. materials sector detracted from relative performance.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
SINCE INC. (NOV. 14, 2016) |
MACKENZIE NORTH AMERICAN VALUE EQUITY |
0.17% |
7.68% |
14.07% |
8.71% |
10.71% |
8.43% |
Mandate repositioning
The fund added to its existing position in TD Bank and initiated a new position in Exxon Mobil Corp.
The fund exited its position in Chevron Corp. and trimmed its position in Loblaw Companies Ltd.
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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