Mackenzie Ivy International Equity
Mandate commentary
Q2 2024
Highlights
① Stock selection within the information technology sector was the single largest contributor to relative performance.
② U.S. equities driven by technology and telecoms sectors.
③ Consumer spending has plateaued, and economic growth has normalized.
Mandate overview
Performance was positive over the period and outperformed the benchmark. Stock selection in the information technology, communication services and consumer discretionary sectors positively impacted performance relative to the benchmark. This was offset partially by stock selection in the health care, consumer staples and financials sectors, which detracted from relative performance. The best-performing sector in the quarter was health care, and the mandate benefitted from an overweight allocation to this sector.
Mandate: positive returns that outperformed the benchmark
Performance contributors
Stock selection in the information technology, communication services and consumer discretionary sectors contributed to relative performance.
Stock selection in Asia Pacific ex Japan and Europe contributed to relative performance.
Performance detractors
Stock selection in the health care, consumer staples and financials sectors detracted from relative performance.
Stock selection in Japan detracted from relative performance.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
since INC. (NOV. 14, 2016) |
MACKENZIE IVY INTERNATIONAL EQUITY |
0.91% |
3.24% |
5.09% |
-2.01% |
3.22% |
4.23% |
Mandate repositioning
The mandate did not add new positions and did not exit positions during the quarter.
The mandate added to existing positions in Nomura Research Institute Ltd., Sonic Healthcare Ltd., HOYA Corporation, Deutsche Boerse AG and ASSA ABLOY AB.
The mandate trimmed its positions in Amcor plc, Olympus Corporation, Taiwan Semiconductor Manufacturing Co., Ltd., Sonova Holding AG and Carlsberg A/S.
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: global economic conditions remain favourable
We believe interest rates at central banks have peaked, with Canada and the European Union lowering rates ahead of the U.S. Federal Reserve. The economic outlook shows signs of levelling out compared to three months ago, as unemployment ticked higher and consumer spending plateaued. The summer months may bring heightened headline risk surrounding the U.S. presidential election, but seasonality and historical data suggest equity markets are typically positive heading into the fall.
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