Portfolio returns: Q1 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jul 13, 2015) |
IG Low Volatility Portfolio – Balanced F | -2.13 | 1.19 | 1.19 | 12.39 | 8.04 | 10.47 | 6.79 | |
Quartile rankings | 2 | 1 | 1 | 1 | 1 | 2 |
IG Low Volatility Portfolio – Balanced Series F
Portfolio commentary
Q1 2025
Highlights
① The portfolio gained over the quarter due to positive returns from equities and fixed income allocations.
② Non-U.S. equities produced positive returns while U.S. equities were negative.
③ Dedicated exposure to low volatility stocks added significant value.
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 and gold prices skyrocketed over the period, benefiting Canadian equity markets. Low volatility stocks outperformed the broader market as defensive sectors gained on information technology sector struggles. 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 Low Volatility Portfolio – Balanced generated a positive return this quarter on the backdrop of strong non-U.S. equity and fixed income returns.
The IG Mackenzie European Equity Fund, the Mackenzie – IG Low Volatility Canadian Equity Pool and the Mackenzie Canadian Dividend Fund were the largest contributors to performance. The IG Mackenzie European Equity Fund was the highest-returning fund, led by financials. Stock selection in the financials and health care stocks added value while selection in materials and industrials detracted, relative to the benchmark. The Mackenzie – IG Low Volatility Canadian Equity Pool, the largest weighted fund in the portfolio, benefited from strong returns from the materials and financials sectors. Stock selection in the industrials and energy sectors was the largest drag on relative performance. The Mackenzie Canadian Dividend Fund, the third-highest contributor, outperformed its benchmark. Stock selection in the financials and energy sectors and an underweight allocation to the information technology sector added significant value.
All our fixed income funds generated a positive return. The top contributors were long-duration bond holdings that included the iShares 20+ Year Treasury Bond ETF and the Mackenzie US Government Long Bond Index ETF, which benefited substantially from the effects of falling yields and economic growth concerns.
The Putnam – IG U.S. Growth Pool was a major detractor to returns, as growth stocks underperformed, especially in the U.S. market. The fund modestly underperformed its benchmark due to security selection in information technology and consumer staples stocks. Allocation to the SPDR S&P 500 ETF Trust was another detractor to performance.
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: managing market risks through diversification and complementary exposures
Looking ahead, the market is expected to remain volatile due to stretched valuations, uncertainty around tariffs, taxes, foreign policy and fluctuating investor sentiment. High-valued U.S. companies may see more downside amid these uncertainties.
Our diversified portfolios, through asset class, regional and investment styles, are well-positioned to mitigate market risks. For example, our investment-grade and long-duration bond allocations are expected to provide low to negative correlated returns versus equities, buffering the effects of equity market turmoil.
Our team continues to focus on minimizing risk across various asset classes and geographies to achieve clients’ financial goals. Our dedicated exposure to low volatility strategies is expected to continue benefiting unit holders by lowering portfolio sensitivity to stock market movements while providing long-term capital appreciation opportunities.
To discuss your investment strategy, speak to your IG Advisor.
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