Portfolio returns: Q1 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Graduation Portfolio F | -0.90 | 0.29 | 0.29 | 2.77 | 4.83 | 4.68 | ||
Quartile rankings | 3 | 2 | 2 | 2 | 2 |
IG Graduation Portfolio Series F
Q1 commentary 2026
Highlights
① The portfolio posted a positive return over the quarter, as short-term bonds outperformed longer-term bonds.
② Performance supported by security selection in corporate bonds.
③ Short-term bonds posted a positive performance.
Portfolio Overview
The first quarter of 2026 was defined by a volatile mix of persistent geopolitical friction in the Middle East and a robust, technology-driven growth narrative in the United States. While the period began with optimism, following the resolution of the U.S. federal shutdown, market sentiment was quickly recalibrated as tensions between the U.S. and Iran escalated. This introduction of headline risk required a nimbler approach to duration and credit, as investors weighed the inflationary pressures of energy price volatility against the deflationary potential of a global growth shock.
The Canadian narrative diverged from that of the U.S., as domestic economic fragilities became more pronounced. The Bank of Canada (BoC) held its overnight rate steady at 2.25% in March, but the tone of policymakers shifted toward caution. Recent data confirmed that the Canadian economy contracted by 0.6% in the final quarter of 2025, and the labour market showed signs of cooling, as the unemployment rate ticked up to 6.7% in February.
Despite this underlying softness, Canadian yields were generally pulled higher. The 10-year government bond yield rose toward 3.6%, reaching its highest level since mid-2025. Supply-side pressures also emerged, following the release of the 2026-27 fiscal estimates, which included $48.4 billion for national defence and a widening deficit in Ontario, due to increased health spending and housing-related tax holidays. The FTSE Canada Short Term Bond Index returned 0.26% for the quarter.
The portfolio’s security selection in the financial and energy sectors positively impacted performance. An overweight allocation to the energy sector also contributed. Overweight duration positioning detracted during the period.
The fund ended the period with an overweight allocation to corporate bonds at 65.9% and an underweight allocation to government bonds at 31.9%. During the period, the fund decreased its allocation to the financial sector and increased its allocation to the industrial and infrastructure sectors.
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: a volatile mix of persistent geopolitical friction
Looking ahead, we are maintaining a long front-end bias in Canada. Our thesis remains that Canada is entering a housing-led downturn, where a combination of falling rents and tighter financing will prompt the Bank of Canada to initiate rate cuts by 0.25-0.5 of a percentage point towards mid-year. Within credit, we are maintaining an overweight stance in investment grade. As we move into the second quarter, we remain disciplined, prioritizing quality as the market continues to navigate this period of heightened geopolitical and fiscal uncertainty.
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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 March 31, 2026, 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 securityholder 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 the Mutual Fund Division of IG Wealth Management Inc. (in Quebec, a firm in financial planning). And additional investment products and brokerage services are offered through the Investment Dealer, IG Wealth Management Inc. (in Quebec, a firm in financial planning), a member of the Canadian Investor Protection Fund.
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