IG Managed Payout Portfolio Series F

Portfolio Commentary<br> Q4 2023

Highlights

① Equity exposure slightly detracted from returns, while fixed income exposure detracted the most from portfolio performance.

② The fourth quarter sent stocks and bonds prices higher.

③ The earnings outlook is improving, as forward-looking indicators turn positive.

Portfolio Overview

The IG Managed Payout Portfolio, Series F, was up in the quarter. Global equities and bonds rallied in the period as investors began anticipating earlier-than-expected central bank rate cuts and positive market sentiment was renewed.

Within equities, the Mackenzie Global Equity Income Fund was the top contributor. Within fixed income, the Mackenzie Canadian Bond Fund was the largest contributor, followed by the Mackenzie Unconstrained Fixed Income Fund. 

Fixed income (65%) and foreign equity (33%) make up the bulk of this fund.

Portfolio: Mackenzie Global Equity Income Fund lead performance while fixed income followed.

Performance contributors

Mackenzie Global Equity Income Fund
+ The fund was the largest weighted allocation in the portfolio and the largest contributor to performance. Relative to its benchmark, the fund underperformed slightly. The options strategy, designed to reduce drawdowns when equity markets are stressed, detracted from performance as equity markets rallied. An underweight position in the information technology sector and security selection in the industrials sector also detracted from relative performance.

Mackenzie Canadian Bond Fund
+ The fund was the second-largest fixed income allocation in the portfolio and the largest contributor to portfolio returns. Relative to its benchmark, the fund underperformed slightly. Duration management and security selection in government bonds detracted the most from performance. Duration management in corporate bonds was the top contributor to returns.

Mackenzie Unconstrained Fixed Income Fund
+ The fund was the largest weighted fixed income allocation in the portfolio. It posted positive returns in the quarter but underperformed its benchmark slightly. Duration management in government bonds was the biggest detractor from performance. On the contrary, shorter duration and security selection in corporate bonds contributed to performance.

Performance detractors

There were no detractors at underlying fund level.

Portfolio Returns: Q4 2023

Total Return 1M 3M YTD 1YR 3YR 5YR 10YR Since Inc. (July 12, 2013)

IG Managed Payout Portfolio F

2.76

6.23

7.50

7.50

0.77

3.20

3.35

3.61

<strong>Market Overview</strong>: The last quarter of 2023 set a positive tone for the new year.

The fourth quarter saw a rally in most asset classes and sectors. Yields went down, sending both stocks and bonds higher. The markets aggressively priced in an economic “soft-landing”, which impacted valuations across the board. U.S. stocks began the quarter with a forward price-to-earnings (P/E) ratio in the mid-17s, but ended close to 20, a significant increase.

Bond yields went up a lot during the year, yet the fourth quarter's rally sent the US 10-year Treasury yield down to 3.87% (the exact same level at which it ended in 2022).

Canadian equities finished the year strongly, with the  S&P/TSX Composite Index increasing by 7.25% (and ending the year up 8.12%). Information technology led the rally, with returns of 23.9% for the quarter, while energy was the only sector to decline.  

<strong>Market Outlook</strong>: Economic indicators point towards U.S. recovery.

Central banks in Canada, Europe and the U.S. are expected to lower interest rates at some point in 2024. Signs show the manufacturing and earnings slump is fading, and the era of high inflation and interest rates is coming to an end. There are more indicators pointing to a U.S. recovery rather than a recession.

The earnings outlook is now brighter, as previous economic soft spots recede, and forward-looking indicators turn positive. Valuations shifted in the fourth quarter of 2023 to reflect this improved outlook. This means that some early-year volatility is possible, as the markets digest the latest macro-economic data and determine if their optimism was warranted or exaggerated.  

To discuss your investment strategy, speak to your IG Consultant.