Portfolio returns: Q2 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jul 12, 2013) |
IG Growth Portfolio – Global Equity Balanced F | 3.16
| 5.73
| 5.22
| 15.26
| 15.57
| 9.18
| 7.18
| 7.83
|
Quartile rankings | 1 | 1 | 2 | 1 | 1 | 2 | 2 |
IG Growth Portfolio – Global Equity Balanced Series F
Portfolio commentary
Q2 2025
Highlights
① The portfolio appreciated during the quarter, led by strong equity returns.
② Canadian and EAFE equities benefited the portfolio.
③ Canadian bonds were a detractor.
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 – Global Equity Balanced generated a positive return this quarter. The portfolio’s equity allocation was the leading contributor to portfolio returns, followed by fixed income.
The Mack Canadian Equity Pool, the Mack EAFE Equity Pool and the Mackenzie – IG U.S. Equity Pool were the largest contributors. 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 Mack EAFE Equity Pool was a strong performer, benefiting from its allocation to Europe and Japan. Security selection in the U.K. and Australia were among the leading contributors to relative performance. An underweight allocation to Japan slightly dragged on relative 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 – IG Canadian Bond Pool and the Mackenzie Broad Risk Premia Collection Fund were the largest detractors. Despite outperforming its benchmark, the Mackenzie – IG Canadian Bond Pool detracted from portfolio returns, as weakness in government bonds weighed on overall performance. Duration management in government bonds was the largest contributor to relative performance, while corporate bond selection was a detractor. 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.
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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