Portfolio returns: Q1 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 12, 2013 |
IG Core Portfolio – Income Plus F |
-1.24
|
1.40
|
1.40
|
8.45
|
4.12
|
5.42
|
3.60
|
4.17
|
Quartile rankings |
3 |
2 |
2 |
2 |
2 |
2 |
1 |
IG Core Portfolio – Income Plus Series F
Portfolio commentary
Q1 2025
Highlights
① The portfolio appreciated during the quarter, led by fixed income and followed by equities.
② Canadian bonds were a top contributor to returns, followed by EAFE equities.
③ U.S. equities were a top detractor to returns.
Portfolio overview
In the first quarter of 2025, global financial markets experienced notable shifts in regional equity performance. Contrary to investors’ original expectations of continued U.S. market dominance, EAFE equities were among the best performers while U.S. equities were among the weakest as investors rotated away from the U.S. U.S. trade policy was a key cause of concern for investors, resulting in the outflow of capital from U.S. equities, a flight towards safer assets, and a hostile global trade environment that threatens global economic growth. Value stocks led over growth stocks and gold prices skyrocketed over the period, benefiting Canadian equity markets. Global bond prices appreciated as yields declined, particularly in the U.S. Canadian bonds performed well, supported by the Bank of Canada’s rate cuts over the quarter.
The IG Core Portfolio – Income Plus generated a positive return this quarter. Fixed income was the leading contributor to returns, followed by equities, while real property slightly detracted from performance.
The Mackenzie – IG Canadian Bond Pool, the Mack EAFE Equity Pool and the Mack Canadian Equity Pool were the largest contributors to performance. The Mackenzie – IG Canadian Bond Pool benefited from strong performance in government bonds. Duration management of government bonds was the largest detractor on a relative basis, while corporate bond selection was the largest contributor. The Mack EAFE Equity Pool was a strong performer, benefiting from its allocation to European equities. Underweight allocations to Japan and security selection in France contributed to relative performance. A slight detractor was the pool’s overweight allocation to Australia. The Mack Canadian Equity Pool generated a positive return due to strong contributions from the materials sector, but modestly underperformed its benchmark due primarily to security selection in the same sector. Security selection in the energy sector was the largest contributor to performance.
The Mack U.S. Equity Pool generated a negative return, led lower by stocks in the information technology and consumer discretionary sectors. Security selection in the health care and industrials sectors was a drag on relative performance. The pool's underweight allocation to the information technology sector was a leading contributor. The IG Mackenzie Real Property Fund was down this quarter and underperformed its benchmark. Writedowns in the market value of a large office property and a retail property the fund is repositioning for future development were leading detractors. Operating metrics across the fund’s property portfolio remain strong with continued positive results in same property revenues and income.
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: global diversification and a balanced approach are key to navigating tariff volatility
The portfolio management team is bearish on global equities, which appear expensive relative to fundamentals. The U.S. equity market is pricier than most global markets and appears to be running out of steam. Investor sentiment has shifted against it in favour of other more attractively priced markets, like international equities, which offer a more attractive risk-return trade-off. The team believes that the U.S. will maintain tariff pressure on Canada throughout the next few quarters and the Canadian dollar will likely weaken further to help the economy absorb the heavy blow of tariffs.
The portfolio management team has a neutral view on duration (sensitivity to interest rates). Trump’s economic policies – government job cuts, trade wars and general uncertainty – will weigh on economic growth. Markets are now expecting three U.S. Federal Reserve cuts this year.
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