Putnam US Value Equity
Mandate commentary
Q1 2025
Highlights
① In a more challenging quarter for U.S. stocks, the portfolio generated a positive return and outperformed its benchmark.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Mandate overview
While broader U.S. equity markets were challenged in the first quarter of 2025, value stocks posted a small gain. Markets encountered considerable volatility in January after the release of artificial intelligence (AI) models developed by Chinese company DeepSeek forced investors to question the outlook for AI spending and its impact on the information technology sector. In the remainder of the quarter, geopolitical and macroeconomic concerns brought ongoing turbulence. President Donald Trump’s tariff policy rollout served as an overhang through the end of the period.
In this environment, the portfolio outperformed its benchmark. Relative performance was driven by strong stock selection, with sector allocation decisions also having a positive impact.
Stock selection was strongest in the consumer staples, communication services and real estate sectors, with financials, consumer discretionary and information technology holdings providing a partial negative offset. From a sector allocation perspective, the portfolio’s relative underweight position in the weak-performing industrials sector was the top contributor. An overweight position in the consumer staples sector also had a positive impact.

Mandate: US Large Cap Value Concentrated SMA.
Performance contributors
Philip Morris International: The overweight position was a top contributor as the company posted strong results, particularly in its growing smoke-free business.
American International Group: An overweight position had a positive impact as operating results showed strong growth, combined with attractive pricing trends.
BJ Wholesale Club: The portfolio benefited from an overweight position. The retailer reported strength across merchandise categories, accompanied by strong outcomes with new memberships and renewals.
Performance detractors
Oracle: An out-of-benchmark position was the top detractor. The stock was negatively impacted by news surrounding China’s DeepSeek models and mixed operating results were not strong enough to overcome concerns.
Berkshire Hathaway: The portfolio’s lack of exposure detracted. While the company is perceived as a safe haven amidst market volatility, it also posted strong underwriting results for the fourth quarter.
Apollo Asset Management: A relative overweight position weighed on results. The company offered moderated guidance on the expectations of less certainty around performance fees for the remainder of the year.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
since INC. (NOV. 14, 2016) |
PUTNAM US VALUE EQUITY |
2.30%
|
2.30%
|
7.57%
|
11.86%
|
22.08%
|
14.27%
|
Mandate repositioning
As the first quarter came to a close, there are more questions than answers regarding the trajectory of U.S. equity markets. Trump’s release of new global tariff policies has thrown a tremendous amount of uncertainty into markets, with risk assets selling off sharply and the threat of an economic recession rising significantly. Given the fluidity of news, the portfolio management team will continue to incorporate new and pertinent information into stock selection. While certain areas of the market and individual stocks may be more challenged given potential changes, there may also be stocks that are less exposed but which have been pulled down in the sell-off. This could present a unique buying opportunity once the portfolio management team has more concrete information.
Regardless, the portfolio management team continues to focus on insulating the portfolio from external risks and we are spending our time understanding the fundamental implications at the stock levels as there are both risks and opportunities that come from these market-clearing events.
By sector, the mandate remains within +/-5% of benchmark weight. Currently, the largest overweight sectors are consumer staples and materials. While financials is the largest sector weight in the portfolio, it is one of the largest relative underweight exposures. The industrials, real estate and communication services sectors exposures also remain below benchmark weight.
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