Portfolio returns: Q2 2024
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Target Education 2030 Portfolio F |
0.72 |
1.23 |
6.80 |
12.61 |
9.99 |
|||
Quartile rankings |
4 |
2 |
1 |
1 |
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Target Education 2030 Portfolio F |
0.72 |
1.23 |
6.80 |
12.61 |
9.99 |
|||
Quartile rankings |
4 |
2 |
1 |
1 |
The IG Target Education 2030 portfolio underperformed its benchmark over the quarter. Tactical asset allocation positioning was relatively flat over the period, and manager selection contributed to active returns.
Within U.S. equities, sector positioning in U.S. equities was relatively flat over the quarter. An overweight allocation to the utilities sector was a positive contributor, while an underweight allocation to the information technology sector detracted from performance. Country positioning was relatively flat over the quarter. Overweight Taiwan was the largest positive contributor to returns over the period, while an overweight position to Japan and Brazil detracted. Stock-bond positioning was additive in the portfolio over the quarter. We maintained an overweight equity position, which was additive given continued strength in activity data over the quarter. The portfolio continues to be underweight duration, which was also additive given rising yields over the period. Manager selection was additive to returns over the period. Allocations to the Fidelity – IG Canadian Equity Pool as well as the Mackenzie – IG Global Bond Pool were additive as both funds outperformed their benchmarks.
The second quarter continued to be dominated by the growing influence of artificial intelligence, with investors focused on opportunities in AI-enabled businesses and hardware. Additionally, there was a notable shift in monetary policy as some central banks adjusted their interest-rate policies as inflation risks receded.
In Canada, year-over-year inflation dropped to 2.9%, while in the U.S. it fell to 3.3%. Both indicators are trending downward and remain range bound. The Bank of Canada was the first among central banks in the G7 to cut its overnight lending rate, which we view not as a divergence in monetary policy, but rather as a precursor to the U.S. Federal Reserve eventually following suit. The European Union also cut rates modestly, while the Bank of England held rates as-is, for now. In our view, Canada and Europe have an increased risk of an economic slowdown, while U.S. and emerging market (EM) economic conditions appear to be improving. Canadian and international equities may be weighed down by slower economic growth and potentially weaker earnings growth, with limited valuation upside.
The macro pendulum continued its shift from spring overheating to summer soft-landing as stocks rose and bond yields fell over recent weeks. The feedback loop between these two scenarios has characterized much of the last year and our expectation remains for this dynamic to continue. While there have been some signs of moderation in pockets of U.S. growth, our indicators suggest that global growth sequentially firmed over the last month and underlying price pressures remained above pre-pandemic levels. Moreover, the latest political developments in France provide further evidence of a shift in voter preferences towards greater fiscal activism. We continue to believe that policymakers will ultimately prioritize sustaining fiscal activism over returning inflation to target, which should be a tailwind to our broadly reflationary positioning.
While French geopolitical risk may create some near-term volatility, we believe the most likely outcome will entail a more stimulative fiscal policy stance, which should provide a tailwind to procyclical assets. As such, we would consider using any weakness in equities or strength in bonds as a potential entry opportunity.
Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus and speak to an IG Advisor before investing. The rate of return is the historical annual compounded total return as of June 30, 2024, including changes in value and reinvestment of all dividends or distributions. It does not take into account sales, redemption, distribution, optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, values change frequently, and past performance may not be repeated. Mutual funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). Any additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund.
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