IG Core Portfolio – Income Balanced Series F

The IG Core Portfolio – Income Balanced rose (0.7%) over the first quarter of 2025, mainly due to positive returns from all the fixed income components of the portfolio and strong performance from European equities. It slightly outperformed the Global Neutral Balanced peer group median (0.5%).

Fixed income and equity markets were mixed. Bonds in Canada and the U.S. were mostly higher as yields declined, while bonds in Europe and the Asia Pacific region tended to fall and underperformed North American bonds. In equity markets, the S&P 500 Index (total return $CAD -4.6%) and Canada’s S&P/TSX Composite Index (total return 2.0%) touched record highs, only to then plunge in response to the U.S. tariff drama, which has pushed economic policy uncertainty to its highest level in several years and, in the eyes of many forecasters, significantly increased the risk of a recession in the U.S. and Canada. The MSCI EAFE Index Total Return (Net) $ CAD rose more than 7%, with European equities significantly outperforming North American markets.

In the fixed income portion of the portfolio, the Mackenzie – IG Canadian Bond Pool was the top contributor, mainly due to its weight at more than 20% of the portfolio. The Mackenzie Sovereign Bond Fund was the best-performing fixed income component. However, due to its lower weight it had limited impact on aggregate results. Portfolio components focused on corporate investment grade bonds and global bonds also contributed to relative performance, while high-yield segments (such as the Putnam – IG High Yield Income Pool and the IG Mackenzie Floating Rate Income Fund), which are more sensitive to rising recession risks, were higher but lagged the broad fixed income universe.

European equity components (the IG Mackenzie European Equity Fund and the IG Mackenzie European Mid-Cap Equity Fund) and the BlackRock – IG International Equity Pool, which has substantial exposure to Europe, were the portfolio’s top performers. The BlackRock – IG International Equity Pool was the portfolio’s best performer. European economic data generally exceeded expectations during the period, while the European Central Bank, Bank of England and Swiss National Bank have all been cutting interest rates. Recent political changes, especially the German election, have led to more aggressive fiscal policies that support economic growth. Most other (non-U.S.) equity components, as well as the BlackRock – IG Active Allocation Pool, made modest gains.

U.S. equity components (the T. Rowe Price – IG U.S. Equity Pool, the Mackenzie IG U.S. Equity Pool, the Mackenzie U.S. Mid Cap Opportunities Fund and the Aristotle – IG U.S. Small Cap Equity Pool), which together comprise more than 20% of the portfolio, all declined and detracted from performance. The Aristotle – IG U.S. Small Cap Equity Pool was the portfolio’s weakest performer. Other components with substantial U.S. equity exposure (the Mackenzie – IG Equity Hedge Pool and the Wellington – IG Global Equity Hedge Pool) also fell.