Portfolio returns: Q2 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Equity F | 3.38
| 5.64
| 5.85
| 15.78
| 16.65
| 11.09
| ||
Quartile rankings | 2 | 2 | 2 | 2 | 2 |
IG U.S. Taxpayer Portfolio – Global Equity Series F
Portfolio commentary
Q2 2025
Highlights
① The IG U.S. Taxpayer Portfolio – Global Equity outperformed its benchmark over the quarter, net of underlying ETF fees.
② Asset allocation decisions were flat over the quarter. U.S. equity sector positions were additive, while country positioning detracted.
③ We continue to position overweight equities and underweight fixed income duration exposure over the quarter.
Portfolio Overview
The IG U.S. Taxpayer Portfolio – Global Equity outperformed its benchmark over Q2 2025.
Sector positioning in U.S. equities was a positive contributor, driven by overweight allocations to the industrials, information technology, and energy sectors. Country positioning detracted over the quarter, driven by underweight positions in Germany and the Netherlands. Overweight positions in Taiwan, Poland, and Canada were additive.
Market overview: volatility gripped global markets during "Liberation Day" fallout
The second quarter of 2025 served as a stark lesson in the market’s ability to absorb sharp, politically driven shocks. The period was dominated by the U.S. administration's chaotic trade policy, beginning with the April announcement of sweeping tariffs, which sent global equities into a tailspin. The S&P 500 Index plunged into correction territory, marking its most significant retreat since March 2020.
This initial panic sent investors fleeing to safe havens, a move clearly reflected in the 5.7% surge in gold prices this quarter. However, the administration’s subsequent and rapid reversal of the policy triggered an equally dramatic V-shaped recovery. The initial fear that gripped the market evaporated, and major equity indices charged back into positive territory.
Throughout this turbulence, central banks remained on the sidelines. The U.S. Federal Reserve (the Fed) and the Bank of Canada (BoC) held rates steady, caught between the inflationary threat of tariffs and the risk of a corresponding economic slowdown.
Market outlook: the implications of global rebalancing
The ever-expanding imprint of U.S. fiscal policy continues to shape the contours of the macro environment and the gradual progress of the One Big Beautiful Bill through Congress should ensure market attention remains devoted to this topic. The practical constraints of large fiscal deficits – both in terms of creating vast financing needs and inhibiting domestic rebalancing – are increasingly binding and have led to progressively more direct policymaker references to the need to reduce interest expense through lower policy rates and source incremental demand for U.S. bonds through financial repression and policy innovation.
We do not perceive any of the current interventions as sufficient to induce a meaningful rally in long-term bonds and anticipate that yields have further to rise before more meaningful steps are taken. We remain underweight longer-dated developed market fixed income and the U.S. dollar, and overweight developed market equities (partially offset by a U.S. underweight position). Given elevated uncertainty around tariff policy and high valuations for U.S. equities, we believe that foreign flows into the U.S. will continue to moderate as investors reconsider exposure and opportunities outside the U.S. look increasingly attractive. Given fiscal announcements in Europe, and to a lesser extent China, non-U.S. equities could be poised for continued outperformance.
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