Manulife North American Dividend Income
Mandate commentary
Q1 2025
Highlights
① Underweight exposure to mega-cap technology stocks, combined with strong stock selection in a variety of sectors, led to outperformance over the quarter.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Mandate overview
The strategy outperformed the benchmark during the period. Prudent stock selection and superior sector allocation both drove performance over the quarter. Lower beta and volatility compared to the benchmark helped the portfolio to endure the recent market downturn.
The portfolio's core focus on business risk diversification also contributed to its outperformance. Underweight positions in the information technology sector, specifically within mega-capitalization technology stocks, which faced heightened volatility amid trade policy concerns, aided relative performance as these stocks were significant detractors from the benchmark's returns.
Slightly detracting from performance was an underweight allocation to the materials sector. The sector saw notable gains as gold prices surged in the face of market uncertainty. The mandate held positions in the top-performing gold producers, but limited exposure in favor of risk-controlled diversification.
Mandate: North American Dividend Income SMA – Outperformed benchmark over Q1
Performance contributors
W.R. Berkley: The company demonstrated strong financial performance and received a demonstration of confidence as Japan-based Mitsui Sumitomo Insurance seeks to acquire a 15% stake in the company through the public market.
Waste Connections: The company demonstrated strong revenue, driven by strategic acquisitions, which cemented its position as a fully integrated operator and increased its pricing power.
Performance detractors
Alphabet: Trade policy concerns contributed to stock price uncertainty over the period. Additionally, the emergence of search alternatives driven by artificial intelligence (AI) and increased AI capital expenditures created apprehension over future market share and cash flow erosion.
TFI International: The company was impacted by the broader challenges impacting the overall trucking industry. Additionally, operating/financial concerns (lower volumes, lower pricing and deteriorating margins) combined with lagging service metrics to increase investor concerns.
Total gross returns:
Total return | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18 2025) |
MANULIFE NORTH AMERICAN DIVIDEND INCOME | -3.42%
|
Mandate repositioning
After a period of market volatility, the portfolio management team generally took profits in select stocks where upside and/or business value creation characteristics changed. The portfolio management team took profits in the industrials and energy sectors, reducing exposure. Conversely the portfolio management team added exposure to the consumer staples, consumer discretionary and materials sectors. The portfolio management team believes that the portfolios are well-positioned to deliver absolute returns and provide uncorrelated business risk diversification.
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.
To discuss your investment strategy, speak to your IG Advisor.
Azure Managed Investments™ provides discretionary investment management services distributed by Investors Group Securities Inc. (“IGSI”). IGSI will manage your Azure Managed Investments Accounts on a segregated basis in accordance with your investment policy statement and the resulting mandate selected by you. Mandates will be managed by Mackenzie Financial Corporation. You are required to make a minimum initial investment of $150,000; please read the Azure Managed Investment Account Agreement for complete details, including fees and expenses.
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 March 31, 2025. 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.
This commentary is published by IG Wealth Management. It is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. It may contain certain forward-looking statements regarding the market conditions which are based upon assumptions believed to be reasonable at the time of publishing. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
© Investors Group Inc. 2025