iProfile™ Portfolio – Global Equity Series I

The iProfile™ Portfolio – Global Equity, Series I, rose over the period (5.0%) and outperformed its Global Equity peer group median (4.9%). The portfolio benefited most from gains in its traditional equity components. Low-volatility equities and alternatives detracted.

Many equity indices, including the S&P 500 Index, the S&P/TSX Composite Index, and the MSCI EAFE Index reached record highs during the period. Equities advanced almost steadily after pivoting from a sharp selloff in early April that was triggered by U.S. President Donald Trump’s so-called “Liberation Day” tariff announcement. Trade policy uncertainty remained high throughout the period and geopolitical tensions flared up, especially concerning fears that Iran might block oil traffic through the Strait of Hormuz in reaction to the U.S. bombing of its nuclear facilities. However, equities continued to push to new highs right up to the final days of the quarter. As a result, the portfolio saw solid gains from the iProfile Canadian Equity Private Pool (7.7%), iProfile U.S. Equity Private Pool (4.4%), iProfile International Equity Private Pool (6.0%), iProfile Emerging Markets Private Pool (8.3%), iProfile ETF Private Pool (5.6%) and iProfile Active Allocation Pool IV (5.9%).

The iProfile Emerging Markets Private Pool was the top performer. It outperformed the MSCI Emerging Markets Index Total Return (Net) $ CAD as all component mandates in the pool outperformed the MSCI benchmark. The pool’s performance benefited most from an overweight allocation to, and stock selection in, South Korea, one of the top performing markets in the quarter. The iProfile Canadian Equity Private Pool was the second-best performing component. The Canadian equity pool benefited from its underweight exposure to the energy sector, a position common to several of its component segments. However, it lagged the S&P/TSX Composite Index mainly due to stock selection in the energy, financials and information technology sectors.

The iProfile U.S. Equity Private Pool was the weakest performer among the portfolio’s main regional equity pools. However, it is the portfolio’s largest component, comprising nearly one third of the portfolio, and therefore was the top contributor to overall results. The information technology sector, which comprises more than one quarter of the pool and was the top-performing sector in the benchmark S&P 500 Index, more than accounted for all of the pool’s net gains. However, the underweight exposure to the information technology sector relative to the index was a chief detractor from relative returns. Stock selection in the health care sector was also a detractor.

The iProfile Active Allocation Pool IV and the iProfile ETF Private Pool, as global equity portfolios, outperformed the U.S. equity pool and benchmark. However, they underperformed the Canadian, international and emerging markets equities pools. The iProfile Active Allocation Pool IV outperformed the MSCI World Index, in part due to its underweight exposure to U.S. equities.

The iProfile Alternatives Private Pool (-3.2%) was the portfolio’s top detractor. Both pool components – the Mackenzie Global Macro Fund and the Wellington – IG Global Equity Hedge Pool – declined. The Wellington pool fell mainly due to its short exposures to equity futures as stock prices rose, and the Mackenzie fund fell mainly due to short positions in several currencies as they rallied versus the U.S. dollar. The iProfile Low Volatility Private Pool (-0.5%) also declined due to the drop in U.S. low-volatility stocks. Low-volatility equity indices outside the U.S. rose modestly but underperformed their non-low-volatility counterparts in all regions.