Portfolio returns: Q3 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 12, 2013 |
IG Core Portfolio – Income F | -0.22
| -0.22
| 1.42
| 1.91
| 4.88
| 2.47
| 2.53
| 2.72
|
Quartile rankings | 2 | 2 | 2 | 2 | 2 | 2 | 1 |
IG Core Portfolio – Income Series F
Q3 commentary 2026
Highlights
① The portfolio declined during the quarter, primarily due to weakness in Canadian fixed-income holdings.
② Exposure to Canadian corporate bonds detracted from performance with rising yields weighing on returns.
③ Money market and real property exposures contributed positively during the quarter.
Portfolio Overview
Fixed-income markets declined in Q3 2026 with persistent inflation, higher energy prices and shifting monetary-policy expectations pushing government bond yields higher. In the U.S., resilient economic activity and elevated inflation prompted the U.S. Federal Reserve to raise its policy rate by 25 basis points in September to 3.75%–4%. Treasury yields increased across the curve, weighing on bond prices, particularly longer-duration securities.
Canadian fixed income also faced pressure despite the Bank of Canada maintaining its policy rate at 2.25%. Concerns around inflation, trade uncertainty and rising global yields contributed to higher Government of Canada bond yields. Longer-duration bonds experienced greater losses, while shorter-maturity securities demonstrated relatively greater resilience. Canadian investment-grade bonds declined, with government securities particularly sensitive to the rise in yields.
Credit markets generally held up better than government bonds, although performance varied across quality segments. Investment-grade corporate credit benefited from comparatively stable spreads and continued investor demand, while lower-rated credit faced greater pressure with financing costs increasing. High-yield bonds proved more resilient than longer-duration government debt over the quarter, supported by higher coupon income and lower interest-rate sensitivity. Overall, duration was a key driver of fixed-income performance, with rising yields outweighing income for many government-bond exposures.
During the quarter, the portfolio generated a negative return with fixed income being a major detractor. The portfolio's performance was heavily driven by its core fixed-income sleeve especially the Mackenzie – IG Canadian Corporate Bond Pool which detracted from portfolio performance but outperformed its benchmark. Energy, financials and infrastructure bonds weighed on absolute returns, while favourable corporate security selection boosted relative performance. Government-related bond exposure also faced pressure from rising yields during the quarter. The IG Mackenzie Mortgage and Short-Term Income Fund declined modestly during the quarter but outperformed its benchmark. Government bonds were the largest detractors, particularly provincial and federal securities, followed by corporate bonds, primarily financials. Positive contributions from mortgage investments and cash partially offset these losses.
Exposure to the IG Mackenzie Canadian Money Market Fund, specifically the defensive and liquid sleeves of the portfolio, supported positively during the quarter. Outside of core fixed income, the IG Mackenzie Real Property Fund also added positively to the return.
Market overview: earnings growth provided a powerful tailwind for equities
The third quarter showed that the current business cycle still has support, but risks have shifted. Growth held up, earnings improved and corporate investment remained firm, but higher oil prices, persistent inflation and rising long-term yields made the path forward less certain. Equities advanced as earnings provided fundamental support, even as higher rates raised the bar for further gains.
Canadian equities benefited from gains in resources and financials. Higher oil prices supported energy, while precious-metals companies were among the strongest performers. Bank earnings were supported by capital-markets activity, trading income and contained credit costs. U.S. equities also advanced, supported by strong earnings and continued technology investment. Higher yields weighed on more rate-sensitive areas.
International markets remained constructive overall, with parts of Asia benefiting from continued demand across the AI technology supply chain. Fixed income faced greater pressure as rising government bond yields outweighed coupon income, while credit remained comparatively resilient. Across markets, the central tension increasingly became earnings strength versus higher inflation and interest rates.
Market outlook: elevated yields favour credit and relative value over duration
So far, 2026 has been defined by the drastic rise in yields across developed markets, led by the U.S. The outlook for Q4 depends on whether the drivers of this increase remain, are tempered or reverse. We see three primary drivers: stubbornly high inflation supported by elevated energy costs, debt and deficit concerns, and continued outsized corporate issuance led by hyperscalers and the AI buildout.
Of these, only a reversal in energy prices seems realistically possible. The AI buildout is a game of survival for hyperscalers, and higher yields are unlikely to be a deterrent. As such, adding duration, even at relatively elevated yield levels, remains unattractive.
Higher yields have made corporate debt attractive from an all-in yield perspective, keeping credit spreads tight despite a more fragile market. We therefore favour alternative opportunities to add carry, such as emerging-market debt, and relative-value opportunities rather than outright duration. One area we are monitoring for Q4 is the rapidly widening spread between U.S. and Canadian government bonds, which increased by 30–35 basis points across the 10-year and 30-year maturities during Q3.
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