Portfolio returns: Q4 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Oct 25, 2021) |
IG Climate Action Portfolio – Global Equity F |
-1.93
|
2.23
|
21.26
|
21.26
|
5.76
|
5.94
|
||
Quartile rankings |
4 |
3 |
3 |
3 |
3 |
IG Climate Action Portfolio - Global Equity Series F
Portfolio commentary
Q4 2024
Highlights
① The portfolio appreciated during the quarter as equities generated strong performance.
② U.S. equities were the leading contributors to returns.
③ Cheaper equities are attractive in this macro environment.
Portfolio overview
Global equities marked a strong finish in Q4 2024, led by strong U.S. equity performance. 50 basis points of interest rate cuts by the U.S. Federal Reserve (the Fed) over the quarter, resilient U.S. economic growth, continued momentum in the artificial intelligence (AI) thematic trade, and expectations of pro-business policy changes from the incoming U.S. government powered U.S. equities higher. Canadian equities also appreciated, as the Bank of Canada cut rates by 100 basis points over the quarter to stimulate a sluggish economy, but threats of U.S. tariffs on Canadian imports by President-elect Donald Trump were a headwind to performance. Global bonds sold off and long-term yields rose as markets dealt with a volatile quarter and priced in fewer interest rate cuts amidst rising expectations of stickier inflation and the global economic impacts of a potential trade war.
Developed market equities returned -2.1% (MSCI EAFE Index CAD), U.S. equities returned 9.0% (S&P 500 Index CAD), Canadian equities returned 3.8% (S&P/TSX Composite Index), global bonds returned -1.3% (Bloomberg Barclays Global Aggregate Bond Index CAD-Hedged), Canadian bonds returned 0.0% (FTSE Canada Universe Bond Index), and high-yield bonds returned -0.2% (ICE BofA U.S. High Yield Bond Index CAD-Hedged).
IG Climate Action Portfolio – Global Equity generated a positive return for the quarter. The Mackenzie Betterworld Global Equity Fund, the Putnam – IG Sustainable Leaders Pool and the Mackenzie Betterworld Canadian Equity Fund were the largest contributors to performance. However, the Mackenzie Betterworld Global Equity Fund underperformed its benchmark with stock selection in the information technology and industrials sectors being the main detractors. The Putnam – IG Sustainable Leaders Pool position also underperformed its benchmark with stock selection in the information technology sector along with an overweight allocation to the materials sector being the primary culprits. The Mackenzie Betterworld Canadian Equity Fund underperformed its benchmark with an underweight position in the energy sector and stock selection in the utilities sector detracting most from performance.
The Mackenzie Greenchip Global Environmental Equity Fund declined over the quarter, led by weakness in stock selection in the information technology and utilities sectors. Additionally, an overweight position in the utilities sector detracted from performance over the quarter.
Market overview: the U.S. dollar and equities dominated the quarter
Investor sentiment turned optimistic in the fourth quarter of 2024, as equities rallied to close the year on a high note. Three defining themes shaped the quarter: a historic U.S. presidential election, ongoing central bank rate cuts and a rise in political risks both domestically and abroad. Collectively, these factors drove market movements, creating an optimistic and rewarding environment for investors following the decisive U.S. election.
Global central banks continued to ease their monetary policies, shifting the focus from combating inflation to supporting economic growth and labour market stability. The Bank of Canada (BoC) cut its overnight rate twice by 50 basis points (half a percentage point) each time, for a total reduction of one percentage point during the quarter, bringing the overnight rate to its lowest level in over two years. Similarly, the U.S. Federal Reserve followed its September cut with two consecutive reductions of one-quarter percentage point each.
Market outlook: positioning to benefit from expected rate cuts and diversify equity risk
The team believes that although global stock markets are expensive, valuations are not extreme. Continued U.S. government deficit spending and the Fed’s eagerness to cut rates on economic weakness supports the team’s view that the largest global economy is unlikely to enter a recession this year. They have favourable views on U.S. small cap stocks and Japanese equities due to their cheaper valuations and exposures to positive economic catalysts.
Duration exposure remains beneficial. While markets expect the Fed to only cut rates once or twice in 2025, the team believes they will need to cut at least three times to support the job market. Potential U.S. trade tariffs could cause a one-time effect on prices, but future inflation could be lower given that trade wars can depress economic growth. The economic situation in Canada remains more dire, and the team prefers Canadian government bonds over Canadian equities.
To discuss your investment strategy, speak to your IG Advisor.
Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus and speak to an IG Advisor before investing. The rate of return is the historical annual compounded total return as of December 31, 2024, including changes in value and reinvestment of all dividends or distributions. It does not take into account sales, redemption, distribution, optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, values change frequently, and past performance may not be repeated. Mutual funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). Any additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund.
This commentary may contain forward-looking information which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of December 31, 2024. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.
This commentary is published by IG Wealth Management. It represents the views of our Portfolio Managers and is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
© Investors Group Inc. 2025