Manulife North American Dividend Income
Mandate commentary
Q2 2026
Highlights
① The mandate returned 12.22%, marginally outperforming its blended benchmark by 0.07 percentage points, as contributions from selected Information Technology and Financials holdings offset weakness among certain Energy holdings.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
North American equities advanced during the second quarter. In Canada, financials led the market, supported by strong earnings, robust capital-markets activity and improving fundamentals. Energy and mining companies declined as easing geopolitical tensions weighed on oil prices and related commodities. In the U.S., resilient economic growth, strong corporate earnings, easing geopolitical concerns and continued investment in artificial intelligence supported equity markets. Information technology led the advance, while industrials also posted a double-digit gain.
Relative performance benefited from an underweight allocation to gold and precious metals, which lagged the broader market, together with favourable security selection in information technology and financials. These gains were partially offset by weakness among certain energy holdings following the decline in oil prices late in the quarter.
Mandate: Manulife North American Dividend Income stock stories
Performance contributors
Cisco Systems contributed positively as investors responded favourably to strong quarterly results, including higher revenue, earnings growth and product orders. The company also benefited from increasing demand for AI-related networking and data-centre infrastructure.
Toronto-Dominion Bank also contributed as the bank delivered stronger underlying earnings, supported by solid results across Canadian banking, wealth management, insurance and wholesale banking. Improving operating momentum and disciplined expense management also supported performance.
Performance detractors
Agnico Eagle Mines detracted despite solid operating results. The company’s shares were pressured by valuation concerns, cost inflation and the timing of anticipated production growth, which is expected to strengthen later in the year.
Suncor Energy detracted as energy stocks weakened alongside a sharp decline in oil prices late in the quarter. Investor sentiment was also affected by a modest earnings shortfall, despite continued strong operating performance.
Total gross returns:
Total return (CAD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18 2025) |
MANULIFE NORTH AMERICAN DIVIDEND INCOME | 12.22
| 11.93
| 18.31
| 13.12
|
Mandate repositioning
During the quarter, the mandate made selective adjustments while maintaining its overall positioning. It took advantage of strength among energy holdings by trimming and exiting selected positions, including Imperial Oil, while maintaining an appropriate level of exposure to the sector.
Within industrials, the mandate reduced several long-held positions that had performed well, including Thomson Reuters and Waste Connections, and redeployed capital into more compelling opportunities. The portfolio remains balanced across sectors, with the stable cash-flow characteristics of its health care and consumer staples holdings helping to offset the higher volatility typically associated with information technology investments.
The mandate maintains diversified exposure across financials, including Canadian and U.S. banks, asset managers, property and casualty insurers, life and health insurers, and insurance brokers. It remains focused on business-risk diversification, balance-sheet strength and prudent position sizing, supporting a lower-beta, lower-volatility profile relative to the benchmark.
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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