Portfolio returns: Q1 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Neutral Balanced F | -3.17
| 0.64
| 0.64
| 11.54
| 10.83
| 8.24
| ||
Quartile rankings | 2 | 2 | 2 | 2 | 2 |
IG U.S. Taxpayer Portfolio – Global Neutral Balanced Series F
Q1 commentary 2026
Highlights
① The IG U.S. Taxpayer Global Neutral Balanced Portfolio outperformed its benchmark over the quarter, net of underlying ETF fees.
② Asset allocation decisions and country rotation strategies were positive over the quarter.
③ Relative value U.S. equity sector positions detracted modestly from performance.
Portfolio Overview
The IG U.S. Taxpayer Portfolio - Global Equity Balanced outperformed its benchmark over Q1 2026.
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, while the long position in the Japanese yen was also a key contributor. Country relative value positioning was positive over the quarter, driven by the overweight in Korea, Taiwan and the U.K. The overweight to China and Japan, and the underweight in Australia were the major detractors. Sector rotation in U.S. equities was slightly negative. While the underweight in consumer discretionary and consumer staples added to the performance, the overweight in information technology and finance detracted.
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 implication on global capital flows. Our initial analysis suggested that 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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