Portfolio returns: Q1 2025
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jun 22, 2020) |
iProfile Portfolio – Global Equity I | -2.85 | 0.89 | 0.89 | 13.86 | 11.24 | 12.41 | ||
Quartile rankings | 1 | 1 | 1 | 1 | 1 |
iProfile™ Portfolio – Global Equity Series I
Portfolio commentary
Q1 2025
Highlights
① The portfolio rose over the period, with positive contributions from all component iProfile pools, except from the iProfile U.S. Equity Private Pool.
② Tariffs cast shadow over consumer confidence.
③ Bank of Canada and U.S. Federal Reserve monetary policies diverge.
Portfolio Overview
The iProfile™ Portfolio – Global Equity, Series I, rose over the period (0.9%) and outperformed its Global Equity peer group median (-0.9%). The portfolio benefited mostly from gains in the iProfile International Equity Private Pool (7.9%). Several other component pools also had strong performances and contributions, including the iProfile Low Volatility Private Pool (5.2%) and the iProfile Active Allocation Private Pool IV (2.9%).
The iProfile U.S. Equity Private Pool was the only constituent pool to lose ground (-4.9%), as the U.S. tariff drama pushed economic policy uncertainty to its highest level in several years and, in the eyes of many forecasters, significantly increased the risk of a recession.
The iProfile International Equity Private Pool was the top performing and top contributing portfolio component and it slightly outperformed the MSCI EAFE Index Total Return (Net) $ CAD. European equities significantly outperformed North American markets. Despite exposure to tariff-related uncertainties like other global markets, European economic data generally exceeded expectations during the period. Recent political changes in Europe also led to more aggressive fiscal policies that support economic growth. Most significant was the German election that delivered a market-friendly, pro-growth government. The largest value-oriented segment of the pool, managed by Wellington Investments, was its top performer, reflecting the broad outperformance of value stocks versus growth stocks in international markets.
The iProfile Low Volatility Private Pool also had a strong quarter, as low-volatility equity indices outperformed their non-low-volatility counterparts in most regions. This was especially true in the U.S., which comprises almost 60% of the low-volatility pool. The MSCI USA Minimum Volatility Index climbed over 5% while the S&P 500 Index fell almost 5%, reflecting a sharp rotation away from high-growth stocks, especially the mega-capitalization technology and Internet stocks that dominated U.S. equity performance last year.
The iProfile Active Allocation Private Pool IV, managed by BlackRock Asset Management Canada Ltd., gained ground and outperformed global equity benchmarks, mainly due to its overweight exposure to Canadian versus U.S. equities and its exposure to European equities. Within U.S. equities, underweight exposure to the information technology and consumer discretionary sectors was beneficial. Both sectors were hit especially hard during the period as investors pivoted away from previous mega-cap outperformers, such as Tesla and Amazon.com in the consumer discretionary sector and Apple, Nvidia and Microsoft in the information technology sector.
The iProfile U.S. Equity Private Pool, the largest constituent pool in the portfolios, fell and underperformed the S&P 500, mainly due to its exposure to the information technology sector, which comprises more than one quarter of the pool and accounted for more than 80% of its negative return, despite the pool having an underweight exposure to the sector. Only the large-cap value segments of the pool advanced.
Market overview: increased uncertainty in U.S. markets favoured international equities
Investor sentiment turned cautious in the first quarter of 2025, driven by heightened market uncertainty following significant shifts in U.S. trade policy under President Trump. Abrupt tariff changes targeting major trade partners — notably Canada, Mexico and China — increased volatility and pressured equity market performance, particularly affecting the S&P 500 Index. In contrast, European markets outperformed significantly, reflecting investors' preference for Europe's attractive valuations and perceived stronger growth potential.
Despite trade-related headwinds, global manufacturing activity showed resilience, signalling potential earnings growth ahead, provided trade tensions stabilize. Central banks diverged in response: the Bank of Canada proactively lowered its overnight rate to 2.75% to bolster growth amid trade uncertainties, while the U.S. Federal Reserve maintained its rate at 4.5%, viewing tariff-related inflation impacts as temporary.
Market outlook: U.S. tariff concerns may temper earning expectations
Looking ahead, we remain optimistic, despite recent market volatility and lingering uncertainties. While U.S. equities have faced challenges, including a pullback from February highs and sensitivity to tariff concerns, other regions, such as Canada, Europe and emerging markets, offer compelling opportunities. These regions have shown resilience, supported by stronger fundamentals and more attractive valuations compared to U.S. markets. As long as unemployment remains low, consumption is expected to continue at a steady pace, supporting economic growth. Despite short-term turbulence, global opportunities continue to emerge, and maintaining a long-term perspective will be key to navigating this market volatility.
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