Portfolio returns: Q2 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Equity F |
1.49 |
2.69 |
12.73 |
19.35 |
9.07 |
|||
Quartile rankings |
3 |
2 |
2 |
2 |
IG U.S. Taxpayer Portfolio – Global Equity Series F
Portfolio commentary
Q2 2024
Highlights
① IG U.S. Taxpayer Portfolio – Global Equity outperformed its Global Equity peer group over the quarter, net of ETF fees.
② Outperformance was mainly driven by a higher allocation to equities and a lower allocation to fixed income versus peers.
③ We are looking to further underweight our fixed income position based on our view of global reflationary dynamics, and we seek to allocate to the most attractive countries and sectors within equities.
Portfolio overview
IG U.S. Taxpayer Portfolio – Global Equity had positive total returns over Q2 2024, outperforming its Global Equity peer group.
Country selection within equities was the primary contributor to performance. Within equities, a higher exposure to U.S. equities versus peers was the primary contributor over the quarter. Preference for Taiwan and lower exposure to France versus a global market cap weighted index was also additive. Within U.S. equity sectors, more exposure to the utilities sector versus the S&P 500 Index was additive to performance, while less exposure to the information technology sector weighed on performance.
Market overview: AI pushed equity growth while central banks started to pivot
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.
Market outlook: Shifting from spring overheating to summer soft-landing.
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 provide favourable conditions for 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.
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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 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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