Portfolio returns: Q1 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 16, 2014 |
IG Core Portfolio – Global Income F | -1.71
| -0.20
| -0.20
| 2.24
| 3.27
| 1.40
| 2.19
| 2.69
|
Quartile rankings | 2 | 2 | 2 | 2 | 3 | 2 | 1 |
IG Core Portfolio – Global Income Series F
Q1 commentary 2026
Highlights
① The portfolio posted negative returns, led predominately by global bond exposure as bond yields increased.
② Real properties contributed to returns during the period.
③ Global bonds ended the period in negative territory.
Portfolio Overview
The first quarter of 2026 was shaped by a sharp shift in market narrative. What began as a continuation of the disinflation trend and a largely economy-driven market backdrop ended in a more volatile, supply-shock environment dominated by geopolitical instability. Against this backdrop, global fixed income markets navigated a choppy quarter and ultimately finished in slightly negative territory. The initial weeks were characterized by expectations of easing from the U.S. Federal Reserve, as growth moderated and labour-market conditions softened at the margin. However, this sentiment was abruptly displaced in the second half of the quarter by an escalation in Middle Eastern conflict. The resulting oil and energy price shock, and repricing of global interest rate paths led to a tactical reassessment of duration and risk across our portfolios.
In the United States, the Federal Reserve maintained the federal funds rate at the target range of 3.5%–3.75% at its March meeting. While the labour market showed signs of cooling, with unemployment at 4.4%, policymakers pointed to a resilient growth narrative supported by resilient consumer spending and continued business fixed investment. Our duration positioning in the U.S. was dynamic; we entered the year underweight the back-end but transitioned to neutral in February, as the geopolitical conflict intensified. While we briefly moved to a long position in 10-year and 30-year Treasuries in mid-March to hedge against a potential growth shock, we have since returned to a neutral stance, as inflation risks became the primary market driver.
The Canadian narrative diverged from that of the U.S., as domestic economic fragilities became more pronounced. The Bank of Canada (BoC) held its overnight rate steady at 2.25% in March, but the tone of policymakers shifted toward caution. Recent data confirmed that the Canadian economy contracted by 0.6% in the final quarter of 2025, and the labour market showed signs of cooling as the unemployment rate ticked up to 6.7% in February.
The IG Mackenzie Real Property Fund was the fourth largest weighted allocation in the portfolio and largest contributor during the period, as strong operating results and increased property market values supported performance. The Mackenzie AAA CLO ETF is the second largest holding in the portfolio and second largest contributor to performance. The Mackenzie IG Global Bond Pool was the largest weighted allocation in the portfolio and largest detractor from performance, as bond yields generally increased during the period.
Market overview: oil shock drove turbulence, commodities dominated inflation fears
The first quarter of 2026 began with supportive economic momentum; improving manufacturing, a stabilizing U.S. housing backdrop and contained inflation. However, this quickly pivoted as the conflict in the Middle-East involving Iran — along with trade disruption around the Strait of Hormuz — pushed energy commodities higher. The energy shock drove volatility across global equities, yet the underlying backdrop proved more resilient than headlines implied, reinforcing the value of diversification.
Canadian equities were resilient, as higher crude oil prices supported the energy sector and helped offset weaknesses in rate-sensitive areas. Defensive sectors, dividends and real-asset exposure provided additional insulation versus many global peers. U.S. fundamentals remained solid, but sentiment weakened as oil lifted inflation expectations. Investors rotated away from expensive, rate-sensitive growth stocks, making performance more about a valuation reset than deteriorating earnings.
Market outlook: a volatile mix of persistent geopolitical friction
Looking ahead, we are maintaining a long front-end bias in Canada. Our thesis remains that Canada is entering a housing-led downturn, where a combination of falling rents and tighter financing will prompt the Bank of Canada to initiate rate cuts of 0.25-0.5 of a percentage point toward mid-year. In the U.S., our positioning was more tactical. We began the year underweight duration but moved to neutral as the Middle East conflict escalated. Within credit, we are maintaining an overweight stance in investment grade. In high yield, we continue to express a high-conviction in the aerospace and defence sectors. In an environment of remilitarization and increased fiscal defence outlays, companies in these sectors offer attractive risk-adjusted profiles. As we move into the second quarter, we remain disciplined, prioritizing quality as the market continues to navigate this period of heightened geopolitical and fiscal uncertainty.
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