IG Low Volatility Portfolio – Income Balanced Series F

Global markets navigated a volatile third quarter as resilient economic activity and corporate earnings competed with persistent inflation and geopolitical uncertainty. U.S. spending and investment remained firm, while elevated inflation prompted the U.S. Federal Reserve to raise rates by 25 basis points (0.25%) in September. Canadian economic activity improved, while the Bank of Canada held its policy rate at 2.25%.

Equities advanced despite rising yields, with U.S. stocks supported by resilient earnings. Canadian equities gained, with energy among the leading sectors, as oil prices increased, while international markets delivered mixed results. Performance varied across equity styles and sectors, with higher-beta and cyclical exposures benefiting from selective market strength.

Low-volatility equities lagged broader markets in the U.S. and Canada, with Canadian low-volatility stocks particularly affected by weakness in defensive sectors, as market leadership favoured higher-beta exposures.

Fixed income faced pressure, as persistent inflation and higher energy prices contributed to rising bond yields. U.S. Treasury and Canadian government bond yields increased, weighing on returns, particularly for longer-duration bonds. Credit markets proved comparatively resilient, while shorter-duration fixed-income exposures generally experienced less sensitivity to rising yields.

The IG Low Volatility – Income Balanced Portfolio generated a positive return during the quarter, on the backdrop of strong equity performance.

Among equities, the Mackenzie – IG Equity Pool, Mackenzie US Core Equity Fund and IG Mackenzie Global Fund were the leading contributors. The Mackenzie – IG Equity Pool contributed positively but slightly underperformed its benchmark. Energy supported returns, while weaker security selection in consumer discretionary and consumer staples detracted from relative performance, partly offset by favourable currency effects. The Mackenzie US Core Equity Fund contributed positively but underperformed its benchmark. Strong security selection in health care and consumer staples boosted relative performance, while weaker selection in industrials, communication services and consumer discretionary detracted from relative performance. The IG Mackenzie Global Fund outperformed its benchmark, supported by strong security selection in financials and favourable positioning in energy, while weakness in communication services and consumer discretionary detracted. The Mackenzie – IG Low Volatility Canadian Equity Pool was the largest equity detractor and underperformed its benchmark. Weakness in utilities, financials and consumer staples weighed on returns, while selection in materials and positioning in information technology detracted from relative performance.

Within fixed income, the Mackenzie – IG Canadian Bond Pool detracted from portfolio performance and slightly underperformed its benchmark. Federal government bonds were the largest source of negative returns. Government-bond positioning and yield-curve effects supported relative performance, while corporate-bond attribution and security selection detracted. The iShares 20+ Year Treasury Bond ETF also detracted, as rising long-term U.S. Treasury yields weighed on long-duration government bonds.