Portfolio returns: Q1 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 19, 2022) |
IG Mackenzie U.S. Dollar Fund – Global Equity F |
-4.12
|
-0.23
|
-0.23
|
9.98
|
8.87
|
|||
Quartile rankings |
2 |
2 |
2 |
1 |
IG Mackenzie U.S. Dollar Fund – Global Equity Series F
Portfolio commentary
Q1 2025
Highlights
① The fund generated a marginal negative return, as U.S. equities declined during the quarter.
② The consumer staples, financials and health care sectors contributed positively to performance.
③ Currency hedging was a major detractor to returns.
Portfolio overview
The IG Mackenzie U.S. Dollar Fund – Global Equity generated a slight negative return against the backdrop of a declining U.S. equity market, although it outperformed its benchmark.
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, 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 international 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.
Within this economic and market backdrop, the IG Mackenzie U.S. Dollar Fund – Global Equity produced a negative return; however, it outperformed its benchmark. The consumer staples, financials and health care sectors contributed positively to the performance. Selection in the consumer discretionary, consumer staples and health care sectors and overweight exposures to consumer staples added relative value to the portfolio. Stock selection in the materials and communication services sectors detracted.
Additionally, the fund’s 100% currency hedging policy to U.S. dollars was a major detractor from returns as the U.S. dollar lost ground in Q1 2025.
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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