Portfolio returns: Q2 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jul 12, 2013) |
IG Growth Portfolio – Canadian Equity F | 3.45
| 6.89
| 6.13
| 19.62
| 16.52
| 13.66
| 8.60
| 9.37
|
Quartile rankings | 1 | 2 | 2 | 2 | 2 | 3 | 2 |
IG Growth Portfolio – Canadian Equity Series F
Portfolio commentary
Q2 2025
Highlights
① The portfolio appreciated over the quarter as Canadian equities gained.
② Canadian and U.S. equities led performance.
③ The small allocation towards alternative strategies detracted from returns.
Portfolio Overview
Global equity markets rebounded strongly in Q2 2025, recovering from early volatility sparked by U.S. tariff announcements. A temporary suspension of tariffs and resilient corporate earnings helped restore investor confidence. U.S. equities led the rally, driven by growth and information technology stocks. Canadian equities also performed well, supported by strength in the materials and financials sectors. EAFE equities posted solid gains, aided by a weaker U.S. dollar and easing inflation. Gold prices surged to record highs, while oil declined on weak demand. Bond markets experienced steepening yield curves and high-yield bonds outperformed investment grade bonds. Central banks in Europe and the U.K. cut rates, while the Bank of Canada and the U.S. Federal Reserve held steady.
The IG Growth Portfolio – Canadian Equity generated a positive return this quarter. The portfolio’s exposure to Canadian equities was the leading contributor to returns, followed by U.S. equities, while alternatives slightly detracted.
The Mack Canadian Equity Pool, the Mackenzie – IG U.S. Equity Pool and the Mackenzie Enhanced Equity Risk Premia Fund were the largest contributors to performance. The Mack Canadian Equity Pool generated a positive return due to strong contributions from the financials sector, but modestly underperformed its benchmark due to an overweight allocation to the energy sector and security selection within the industrials sector. Security selection in the materials sector was the largest contributor to performance. The Mackenzie – IG U.S. Equity Pool delivered strong returns, led by stocks in the information technology sector. A slight underweight allocation and security selection in the same sector modestly dragged on relative performance. The pool's security selection in the health care and materials sectors were leading contributors to returns. The Mackenzie Enhanced Equity Risk Premia Fund is a levered equity fund. The investment team uses leverage to manage total portfolio equity exposure in a capital efficient way. The fund contributed to returns as broad equity markets appreciated.
The Mackenzie Broad Risk Premia Collection Fund was the slight sole detractor to returns this quarter. While not a detractor, the Mackenzie Enhanced Fixed Income Risk Premia Fund was among the smallest contributors in the portfolio. The Mackenzie Broad Risk Premia Collection Fund, an alternative strategy fund that combines equity exposure with multiple alternative strategies in a capital efficient manner, detracted from returns as alternatives strategies underperformed. The Mackenzie Enhanced Fixed Income Risk Premia Fund is a levered alternative fixed income fund. The investment team uses the fund to efficiently manage total portfolio fixed income exposure. Fixed income performance over the period was fairly flat.
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: cautious on equities, strategically constructive on bonds amid trade turmoil
We remain moderately bearish on global equities. Valuations are elevated relative to macro risks, and U.S. stocks appear stretched after a strong run, with earnings revisions turning lower. International equities continue to offer a more attractive risk-return profile.
Ongoing U.S. tariffs are expected to pressure Canada’s economy and currency. A Canadian recession is increasingly likely, which would prompt the Bank of Canada to cut rates below 2% by year-end. In contrast to the U.S., which is likely to suffer from both a growth and an inflation shock, prices are not as much of a concern in Canada. The Bank of Canada has more flexibility to cut rates without fear of an inflation spike. We hold a neutral view on duration (sensitivity to interest rates), but prefer Canadian government bonds over U.S. Treasuries. Other developed market currencies (U.S. dollar, Japanese yen, euro, and pound) are preferred over the Canadian dollar.
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