Portfolio returns: Q2 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Nov 12, 2018) |
IG Managed Risk Portfolio – Income Focus F | 1.18
| 1.35
| 3.21
| 10.38
| 8.67
| 5.19
| 5.58
| |
Quartile rankings | 3 | 3 | 2 | 1 | 1 | 1 |
IG Low Volatility Portfolio – Income Focus Series F
Portfolio commentary
Q2 2025
Highlights
① The portfolio gained over the quarter, predominantly due to positive returns from Canadian and global equities and an overweight position in equities relative to bonds.
② Growth equities generated strong returns while global and U.S. low-volatility equities lagged the main equity benchmarks.
③ Overall fixed income underperformed equities, but high-yield bonds performed well, supported by tighter credit spreads and positive investor sentiment towards risk assets.
Portfolio Overview
Global equity markets rebounded strongly in Q2 2025, recovering from early volatility sparked by U.S. tariff announcements. A temporary suspension of most tariffs, along with resilient corporate earnings, helped restore investor confidence. Emerging market and U.S. equities led the rally, driven by information technology and broader growth stocks. Canadian equities also performed well, supported by strength in the materials and financials sectors. EAFE equities posted solid returns, boosted by stronger capital inflows and easing inflation. Meanwhile, low-volatility equities delivered positive returns, supported by resilient, high-quality businesses. Gold prices surged to record highs, while oil declined due to weak demand. Bond markets experienced yield curve steepening, and high-yield bonds outperformed investment grade bonds. The European Central Bank and the Bank of England cut rates, while the Bank of Canada and the U.S. Federal Reserve held steady.
The IG Low Volatility Portfolio – Income Focus generated a positive return this quarter on the backdrop of strong equity returns.
The Mackenzie – IG Low Volatility Canadian Equity Pool, the Mackenzie Canadian Dividend Fund and the IG Mackenzie European Equity Fund were the top contributors. The Mackenzie – IG Low Volatility Canadian Equity Pool, the heaviest weighted fund in the portfolio, was the highest contributor, led by positive performance in the industrials sector. Stock selection in the industrials and materials sectors added value while selection in the energy and financials sectors detracted from performance, relative to the benchmark. The Mackenzie Canadian Dividend Fund was the second-highest contributor to performance. The fund posted a positive return although it underperformed its benchmark. Stock selection in the industrials and communication services sectors contributed positively to relative returns whereas selection in the energy and financials sectors detracted. The IG Mackenzie European Equity Fund was another contributor, benefiting from strong performance in the financials sector. Stock selection in the financials and health care sectors added value while selection in the industrials sector was the largest detractor relative to performance.
Within bonds, the Putnam – IG High Yield Income Pool was the highest-performing fixed income fund, followed by the iShares iBoxx $ High Yield Corporate Bond ETF, benefiting from lower duration positioning and narrower corporate spreads. The iShares Core U.S. Aggregate Bond ETF benefited from solid gains driven by corporate bonds.
The iShares 20+ Year Treasury Bond ETF and the Mackenzie – IG Income Pool detracted from performance due to rising long-term yields on concerns around rising debt levels in the U.S.
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: navigating uncertainty: a focus on quality and diversification
Now that the latest U.S. tax legislation has been signed into law and investors are gaining greater clarity on U.S. trade policy, we anticipate equities will continue to outperform bonds. However, given the backdrop of cooling consumer spending and softer private sector hiring, we continue to favour high-quality equities in less volatile industries.
As the U.S.-Canada rate differential has narrowed – benefiting our portfolios – we are gradually reducing our allocation to U.S. bonds in favour of domestic fixed income. Overall, we maintain a neutral view on duration, balancing the likelihood of additional rate cuts in Canada and the U.S. with the potential for sizable debt issuance going forward.
We are confident that in the current economic environment, marked by uncertainty around the impact of tariffs and taxes, diversification across countries and industries will be critical to managing portfolio risks.
To discuss your investment strategy, speak to your IG Advisor.
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