Portfolio returns: Q1 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Target Education 2040 Portfolio F | -3.95 | 1.00 | 1.00 | 17.92 | 15.74 | 14.96 | ||
Quartile rankings | 3 | 1 | 1 | 1 | 1 |
IG Target Education 2040 Portfolio Series F
Q1 commentary 2026
Highlights
① The Target Education 2040 portfolio outperformed its benchmark over the quarter, net of underlying fund and ETF fees.
② Asset allocation decisions and relative value country positioning were positive over the quarter. Relative value U.S. equity sector positions detracted modestly from performance.
③ Allocations to T. Rowe US Equity drove most of the outperformance in the portfolio, while allocations to the Mackenzie IG Canadian Equity Pool fund were detractive.
Portfolio Overview
The IG Target Education 2040 Portfolio outperformed its benchmark over the quarter.
Asset allocation positioning was positive over the quarter. The modest overweight in Japanese equities and the underweight in U.S. equities were positive for active performance. The long position in the Japanese yen was also additive. Country relative value positioning was positive, driven by the overweight in Korea, Taiwan and the U.K., and the underweight in India. The overweight in China and Japan, and the underweight in Australia and Brazil were the major detractors. Sector rotation in U.S. equities was slightly negative, driven by the overweight in information technology and finance, and the underweight in energy.
Active equity managers contributed to the performance over the quarter, with allocations in the T. Rowe US Equity Fund as the key contributor.
Market overview: oil shock drove turbulence, commodities dominated inflation fears
The first quarter of 2026 began with supportive economic momentum; improving manufacturing, a stabilizing U.S. housing backdrop and contained inflation. However, this quickly pivoted as the conflict in the Middle-East involving Iran — along with trade disruption around the Strait of Hormuz — pushed energy commodities higher. The energy shock drove volatility across global equities, yet the underlying backdrop proved more resilient than headlines implied, reinforcing the value of diversification.
Canadian equities were resilient, as higher crude oil prices supported the energy sector and helped offset weaknesses in rate-sensitive areas. Defensive sectors, dividends and real-asset exposure provided additional insulation versus many global peers. U.S. fundamentals remained solid, but sentiment weakened as oil lifted inflation expectations. Investors rotated away from expensive, rate-sensitive growth stocks, making performance more about a valuation reset than deteriorating earnings.
Market outlook: shifting global macro landscape
While Q1 2026 has been characterized by a range of individual geopolitical disturbances (including Venezuela, Greenland, and Iran), we believe it is critical that investors contextualize these events against the shifting global macro landscape. Global inflation dynamics have shifted from a services-led disinflation narrative toward more persistent, supply-driven pressures, with energy, transportation and industrial inputs reinforcing elevated price levels and increasing the risk of reacceleration across major economies. Global capital flows are gradually rebalancing, with surplus economies increasingly retaining savings domestically, and currency misalignments, particularly in Asia, highlighting a reduced reliance on U.S. assets and a shift in the global macro equilibrium. Central banks are navigating a more complex policy trade-off, with persistent inflation limiting the scope for easing and increasing the likelihood of a more pessimistic stance outside the U.S., while fiscal policy is playing a more active role in stabilizing growth and absorbing shocks.
We have been focused on reconciling the impact of the U.S-Iran conflict on growth, inflation and policy with market pricing while also assessing its implications on global capital flows. Our initial analysis suggested that the consensus was too relaxed on the upside risks to price pressures, and we added back to our underweight fixed income position (by selling German bonds), having closed some of the exposure in late 2025 and early 2026. As mentioned above, we eliminated our directional equity overweight by selling some of our Japanese equity exposure in late February, as market pricing of international stocks looked optimistic against the backdrop of significant movement in U.S. military assets. We further reduced the size of our relative value Japanese equity positioning and the overweight to the Australian dollar in early March, as we felt that the initial market response to the war was too sanguine.
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