Mackenzie North American Value Equity
Mandate commentary
Q3 2024
Highlights
① Positive returns for the mandate were in line with benchmark returns. Positive stock selection in the energy and industrials sectors, particularly in Canada, contributed to overall performance against the broad benchmark.
② Active central bank policies were key market drivers.
③ An improving market environment, as interest rates fall.
Mandate overview
Performance was positive over the period and largely in line with the benchmark index. The Canadian market outperformed the U.S. market this past quarter. Positive stock selection in the energy and industrials sectors in Canada contributed positively to returns relative to the benchmark. This was offset by negative stock selection in the materials sector.
In the U.S., positive stock selection in the consumer staples, health care and materials sectors contributed positively to returns relative to the benchmark. This was offset by negative stock selection in the information technology sector.
Mandate: positive returns in line with the benchmark
Performance contributors
Positive stock selection in the Canadian energy and industrials sectors contributed to relative performance.
Positive stock selection in the U.S. consumer staples, health care and materials sectors contributed to relative performance.
Performance detractors
Negative stock selection in the Canadian materials and financials sectors detracted from relative performance.
Negative stock selection in the U.S. information technology sector detracted from relative performance.
Total gross returns:
Total return |
QTD |
YTD |
1YR |
3YR |
5YR |
SINCE INC. (NOV. 14, 2016) |
MACKENZIE NORTH AMERICAN VALUE EQUITY |
8.30% |
16.62% |
26.37% |
11.03% |
11.78% |
9.25% |
Mandate repositioning
The fund modestly added to some existing positions and did not initiate any new positions.
The fund trimmed its positions in Open Text Corporation and Canadian Natural Resources Ltd.
Market overview: markets rallied with expanding breadth
Investor sentiment shifted to a “risk-on” attitude in the third quarter, in response to changes in central bank monetary policy across key economies. It began with the Bank of Canada (BoC) and the European Central Bank (ECB) in the second quarter and continued into the third. The BoC was particularly active, making two additional cuts of 25 basis points (0.25 percentage points) to its overnight rate this quarter.
The U.S. Federal Reserve (the Fed) started its own policy easing with a surprise 50 basis-point (0.5-percentage-point) cut in mid-September, launching rallies in both bonds and equity markets. The Fed noted an increase in the unemployment rate and that the battle against inflation was no longer a primary reason to maintain a restrictive monetary policy.
Market outlook: the market environment is generally improving
Looking ahead, central banks in Canada and the United States will continue to focus on supporting labour markets. Stimulus measures in China could help boost domestic consumer demand by propping up the Chinese stock market, property market and economy. Despite geopolitical risks from the Middle East conflict and the upcoming U.S. election, the market environment is improving.
We see a soft-landing scenario emerging in the U.S. and other areas around the world. This should support equity markets and help bond returns, as interest rates continue to fall from where they are today.
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