Portfolio returns: Q1 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jul 12, 2013) |
IG Income Portfolio – Growth Series F | -1.29
| 1.03
| 1.03
| 10.43
| 5.54
| 5.74
| 4.45
| 4.91
|
Quartile rankings | 1 | 2 | 2 | 1 | 3 | 4 | 3 |
IG Income Portfolio – Growth Series F
Portfolio commentary
Q1 2025
Highlights
① The portfolio gained over the quarter due to positive returns from fixed income and equity allocations.
② Non-U.S. equities performance was the primary contributor to returns.
③ Positive Canadian bond returns were boosted by falling interest rates.
Portfolio Overview
The portfolio was up in the quarter. All funds within the portfolio generated positive returns before fees.
Equities exposure, represented by the portfolio’s 49% allocation to the Mackenzie Global Equity Income Fund, was a positive contributor to performance. Relative to its benchmark, the fund outperformed. The fund utilizes a stock options strategy designed to preserve capital during times of severe equity market stress. The stock options for the quarter were the topmost contributor as U.S. equity markets experienced large negative returns. The funds’ positioning to invest in low volatility and high-quality dividend-paying equities, particularly within Canada, added significant value as the market shifted from growth-oriented and technology-driven stocks. The health care, consumer staples and energy sectors bolstered performance, and selection in information technology and industrials stocks also benefited.
The Mackenzie Canadian Bond Fund, representing 16% of the portfolio, was the largest contributor to performance. An overweight allocation to corporate bonds and selection in government bonds was the major contributor to performance. The fund also benefited from duration positioning in U.S. bonds.
The Mackenzie Sovereign Bond Fund, representing 9% of the portfolio, was the top performing fixed income fund. The fund holds 10-year government bonds across the globe and benefited substantially from the effects of falling yields and economic growth concerns.
The Mackenzie Gold Bullion Fund, representing 2% of the portfolio and held as an inflation-sensitive asset, performed extremely well this quarter as the price of gold reached a record high and returned 19%. Gold prices rose in Q1 2025 due to escalating trade tensions and increased gold purchases.
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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