IG Core Portfolio – Income Focus Series F

The IG Core Portfolio – Income Focus posted a return of 0.53% over the first quarter of 2026 and outperformed its peer group, which returned 0.02%. Performance was driven by a broad mix of contributors, with Canadian equity and income-oriented strategies providing the largest positive support to total return. The Mackenzie-IG Canadian Equity Income Pool was the strongest individual contributor, adding 0.21%, followed by the BlackRock-IG Active Allocation Pool I at 0.18%, the Mackenzie-IG Canadian Equity Pool at 0.13%, the JPMorgan-IG Emerging Markets Pool II at 0.07% and the IG Mackenzie Real Property Fund at 0.06%. Additional support came from the Fidelity-IG Canadian Equity Pool and the IG Mackenzie Pan Asian Equity Fund. In aggregate, positive contributions from Canadian equity, active allocation, emerging markets and real property more than offset weakness in U.S. equities, global bonds and alternative-oriented mandates.

Market conditions were challenging during the first quarter of 2026. Global equity markets experienced elevated volatility, with divergent performance across regions. The S&P 500 Index declined 4.6% (in Canadian dollars), while the S&P/TSX Composite Index advanced approximately 2.6%, supported by resilient commodity prices and record gold prices. Fixed income markets faced headwinds from rising yields, as the escalating Middle East conflict and resulting oil price spike heightened inflation concerns. The U.S. Federal Reserve maintained its policy rate at 3.5%-3.75% throughout the quarter, while the Bank of Canada held its policy rate at 2.25%, both adopting wait-and-see stances. U.S. Treasury yields rose over the quarter, with the 10-year yield reaching roughly 4.35% by early April, while Canadian 10-year government bond yields also moved higher. Within this environment, Canadian equities benefited from energy and materials sector strength, with gold surging to record levels. Emerging market equity exposures also showed resilience. However, U.S. equities struggled amid technology sector weakness and geopolitical uncertainty, while global bond allocations faced pressure from rising yields and persistent inflation concerns linked to energy price volatility.

Canadian-oriented strategies emerged as the primary source of positive performance. The Mackenzie-IG Canadian Equity Income Pool contributed most to total return, while the Mackenzie-IG Canadian Equity Pool and Fidelity-IG Canadian Equity Pool also added meaningfully. This strength was consistent with the relative resilience of the Canadian market during the quarter, as energy and commodity-sensitive exposures benefited from rising oil prices. The BlackRock-IG Active Allocation Pool I also contributed positively, reflecting BlackRock’s evolving regional views, beginning with a preference for non-U.S. equities, particularly Korea, followed by continued conviction in Japan and broader Asian emerging markets, and ending with a more constructive U.S. equity tilt later in the quarter. Emerging market and international allocations added further support, with the JPMorgan-IG Emerging Markets Pool II, IG Mackenzie Pan Asian Equity Fund and BlackRock-IG International Equity Pool contributing positively, although the IG Mackenzie European Equity Fund detracted modestly. The quarter’s emerging market strength was supported by semiconductor-related holdings and selective commodity exposures, while the Pan-Asian sleeve benefited from stronger Asian market performance.

Income-oriented and defensive holdings also helped stabilize results. The IG Mackenzie Real Property Fund contributed 0.06%, supported by improving fundamentals in industrial properties and stable rental conditions. The IG Mackenzie Mortgage and Short Term Income Fund, Mackenzie-IG Canadian Bond Pool, Mackenzie-IG Canadian Corporate Bond Pool and Mackenzie Sovereign Bond Fund all added modestly to total return, reflecting the portfolio’s more defensive structure. Even so, parts of fixed income remained challenged. The PIMCO-IG Global Bond Pool was the single largest detractor, subtracting 0.07%, while the Mackenzie-IG Global Bond Pool also detracted modestly. Rising corporate and government bond yields, tighter expectations for policy easing and sticky inflation weighed on global bond strategies over the quarter.

U.S. equity allocations were the most significant equity headwind. The Mackenzie-IG U.S. Equity Pool detracted 0.06%, while the T. Rowe Price-IG U.S. Equity Pool detracted 0.05%, reflecting weakness in large-cap U.S. equities. The Mackenzie U.S. Mid Cap Opportunities Fund also detracted 0.03%. More broadly, U.S. equity weakness was concentrated in information technology and other growth-oriented sectors, where concerns around elevated valuations and the sustainability of AI-related spending pressured returns. Additional modest headwinds came from the Mackenzie Global Macro Fund, the Wellington-IG Global Equity Hedge Pool, and the Putnam-IG High Yield Income Pool. In this context, the portfolio’s outperformance versus peers was driven by stronger contributions from Canadian equity income, active regional allocation, emerging markets and real property, which more than offset weakness in U.S. equities and global bonds.