Portfolio returns: Q2 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 16, 2014 |
IG Core Portfolio – Global Income F | 0.94
| 0.71
| 1.48
| 4.63
| 4.08
| 1.47
| 2.54
| 2.73
|
Quartile rankings | 4 | 3 | 4 | 4 | 4 | 3 | 3 |
IG Core Portfolio – Global Income Series F
Portfolio commentary
Q2 2025
Highlights
① The portfolio posted gains in Q2 2025 as global markets demonstrated resilience amid heightened uncertainty surrounding U.S. trade policy and escalating geopolitical tensions.
② Global bond exposure contributed most to portfolio performance.
③ Long-end bond yields ended the period higher in North America, reflecting a steepening of the yield curve.
Portfolio Overview
The second quarter of 2025 opened with markets leaning into the disinflation narrative and the prospect of global rate cuts. But that momentum proved fragile. Sticky core inflation, mixed data, and geopolitical noise kept central banks on the sidelines and left rate curves more reactive than directional.
In fixed income, inflation breakeven spreads widened and term premiums were volatile as markets digested a collision of geopolitical volatility and macro recalibration. The 10-year U.S. Treasury yield moved in a wide 60bps range during the quarter, peaking around 4.60% in mid-May before catching a duration bid in the back-half of the quarter. The 2-year yield dipped below 3.50% after “Liberation Day”, rebounding toward 4.00% and then 3.75% by quarter-end. A growing sense that the U.S. Federal Reserve would need to cut rates sooner rather than later helped support the front end into June.
In Canada, the macro narrative continued to diverge. The Bank of Canada’s April 16 Monetary Policy Report presented scenario analysis around ongoing tariff uncertainty, while reiterating downside growth risks in worst-case trade outcomes. The Bank of Canada continued to stress household debt sensitivity and cumulative tightening effects, but held its policy rate steady in both April and June.
Canadian yields declined across the curve, particularly in the front end. The 2-year yield fell to 2.25% early in the quarter before rebounding toward 2.60%, while 10-year yields ended around 3.25%. The Canada-U.S. 10-year spread narrowed, moving from -125bps at the start of the quarter to approximately -95bps by the end, in line with our long-held view of spread narrowing. Both curves steepened over Q2 2025, but rising issuance expectations in Canada meant a long-end underperformance.
The Mackenzie IG Global Bond Pool is the largest weighted allocation in the portfolio and the largest contributor to performance. Global bonds posted positive returns during the period, benefiting from a weaker USD and a growing expectation of rate cuts.
The Mackenzie North American Corporate Bond Fund is the fifth-largest weighted allocation in the portfolio and a positive contributor to performance. The fund posted positive returns during the period as credit markets rebounded off initial “Liberation Day” tariff concerns.
Market overview: volatility gripped global markets during "Liberation Day" fallout
The second quarter of 2025 served as a stark lesson in the market’s ability to absorb sharp, politically driven shocks. The period was dominated by the U.S. administration's chaotic trade policy, beginning with the April announcement of sweeping tariffs, which sent global equities into a tailspin. The S&P 500 Index plunged into correction territory, marking its most significant retreat since March 2020.
This initial panic sent investors fleeing to safe havens, a move clearly reflected in the 5.7% surge in gold prices this quarter. However, the administration’s subsequent and rapid reversal of the policy triggered an equally dramatic V-shaped recovery. The initial fear that gripped the market evaporated, and major equity indices charged back into positive territory.
Throughout this turbulence, central banks remained on the sidelines. The U.S. Federal Reserve (the Fed) and the Bank of Canada (BoC) held rates steady, caught between the inflationary threat of tariffs and the risk of a corresponding economic slowdown.
Market outlook: a gradual shift away from tariffs and fiscal themes
Looking ahead to Q3 2025, we expect markets to gradually shift away from tariffs and fiscal themes as dominant drivers. The primary focus is likely to return to U.S. Federal Reserve policy. Powell has been vocal in forecasting inflation pass-through from tariffs, but if it fails to materialize in the June and July data, the U.S. Federal Reserve could find itself behind the curve by mid-August. Markets are already starting to price additional cuts, and sooner. Steepeners are favoured in that scenario, with the front end expected to do much of the heavy lifting, but we continue to like U.S. duration in the 10-year space into H2 as we think the whole curve could be affected and we do not anticipate major changes in U.S. fiscal policy.
To discuss your investment strategy, speak to your IG Advisor.
Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus and speak to an IG Advisor before investing. The rate of return is the historical annual compounded total return as of June 30, 2025, including changes in value and reinvestment of all dividends or distributions. It does not take into account sales, redemption, distribution, optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated. Mutual funds and investment products and services are offered through the Mutual Fund Division of IG Wealth Management Inc. (in Quebec, a firm in financial planning). And additional investment products and brokerage services are offered through the Investment Dealer, IG Wealth Management Inc. (in Quebec, a firm in financial planning), a member of the Canadian Investor Protection Fund.
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 June 30, 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 represents the views of our Portfolio Managers and 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. 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.
©2025 IGWM Inc.