IG Target Education 2030 Portfolio Series F

Portfolio commentary
Q1 2024

Highlights

① IG Target Education 2030 Portfolio outperformed its dynamic glidepath benchmark over the quarter, gross of fees.

② Stock-bond positioning was the largest positive contributor to returns given an overweight allocation to equity and an underweight allocation to fixed income.  

③ Manager selection was also additive to returns over the period. An allocation to the T. Rowe Price – IG U.S. Equity Pool was the strongest positive contributor.  

Portfolio returns: Q1 2024

Total Return 1M 3M YTD 1YR 3YR 5YR 10YR Since Inc. (Jan 30, 2023)

IG Target Education 2030 Portfolio F

2.43

5.51

5.51

12.75

     

11.12

Quartile rankings

1

1

1

1

     

 

Portfolio overview

IG Target Education 2030 Portfolio outperformed its benchmark (gross of fees) over the quarter by 21bps. Tactical asset allocation positioning was relatively flat over the period, and manager selection contributed to active returns.

Within U.S. equities, sector positioning was relatively flat over the quarter. Overweight allocations to the communication services and energy sectors were positive contributors, while underweight allocations to the industrials and health care sectors detracted from performance. Country positioning detracted over the quarter. Overweight allocations to Japan, Italy and Taiwan were the largest positive contributors to returns over the period. Underweight allocations to U.S. and German equities were the primary detractors. Stock-bond positioning was additive in the portfolio over the quarter. We maintained an overweight equity position over the quarter, which was additive given continued strength in activity data over the quarter. The portfolio continues to be underweight duration, relatively unchanged which was also additive given a repricing of Federal Reserve policy easing to later in 2024. Manager selection was also additive to returns over the period. An allocation to the T. Rowe Price – IG U.S. Equity Pool was the largest contributor. 

Market overview: Leap year liftoff – Q1's market highs.

In the first quarter, equity markets delivered a solid performance, reinforcing the sentiment that inflation is nearly under control and recession fears for the U.S. economy are subsiding.

The U.S. maintained a positive economic outlook, whereas Canada has experienced several months of subdued GDP growth, highlighting divergent economic narratives between the two closely linked markets. This contrast may lead the Bank of Canada to enact policy changes before the U.S. Federal Reserve, to address Canada's specific economic hurdles.

Market overview: Leap year liftoff – Q1's market highs.

Market outlook: Macro Data Realigning to a Reflationary Theme.

Macro markets spent the final months of 2023 embedding an incrementally more pessimistic view on economic growth and an associated dovish outlook for inflation and central bank policy. As market pricing moved away from our relatively constructive macro outlook, we increased the size of our underweight duration and overweight equity positions in December and continued to do so in early 2024. Since then, macro markets have started to realign more closely with our central case that growth can remain elevated while inflation is slower to come down. Our analysis of market pricing suggests that, despite rate cuts being priced out for 2024, there is scope for procyclical positioning to run further given a re-acceleration in the manufacturing cycle, procyclical fiscal policy, and continued labour market strength. 

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