Portfolio returns: Q4 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 12, 2013 |
IG Core Portfolio – Growth F |
-0.69
|
3.97
|
23.47
|
23.47
|
8.42
|
10.64
|
9.25
|
10.04
|
Quartile rankings |
2 |
2 |
2 |
2 |
1 |
2 |
2 |
IG Core Portfolio – Growth Series F
Portfolio commentary
Q4 2024
Highlights
① The portfolio advanced mainly due to gains in North American equities as central banks cut interest rates and economic data suggested growth in the U.S. was solid, if not accelerating.
② U.S. equities delivered the strongest returns and contributed the most to total returns.
③ Global bonds detracted the most from total returns.
Portfolio Overview
The IG Core Portfolio – Growth rose (+4.0%) over the final quarter of 2024, led by gains in U.S. equities. It outperformed its Global Equity peer group median (+3.2%). The S&P 500 Index (total return $ CAD +9.1%) and Canada’s S&P/TSX Composite Index (total return +3.8%) touched record highs late in the period, with the U.S. presidential election and central bank interest rate cuts in both countries adding only brief bouts of volatility to an otherwise steady trek higher for stocks. In the U.S., optimism for a soft landing was boosted by economic data releases that suggested growth was solid, if not accelerating. Canadian equities rode on the U.S. coattails in the expectation that U.S. strength would mitigate any slowdown in Canada.
Many international equity markets declined (Japan and Germany were notable exceptions) as economic growth struggled and political turmoil and geopolitical tensions weighed on sentiment. A significant weakening of the Canadian dollar versus the U.S. dollar added to returns for Canadian investors from international investments.
Because of the strength in U.S. markets, the Mackenzie – IG U.S. Equity Pool and the T. Rowe Price IG U.S. Equity Pool, which together comprise almost one half of the portfolio, accounted for more than three quarters of the portfolio’s total return. Neither was the portfolio’s top performer – that distinction goes to the smaller Wellington – IG Global Equity Hedge Pool, mainly due to its significant U.S. exposure. The Mackenzie and T. Rowe Price U.S. pools both benefited most from exposure in the information technology sector, but both underperformed the S&P 500 Index. The Mackenzie-managed pool underperformed mainly due to underweight exposure to and stock selection in the consumer discretionary sector, while the T. Rowe Price-managed pool lagged mainly due to selection in the health care and consumer discretionary sectors.
Other components with significant U.S. exposure also contributed to the pool’s relative performance, including the IG Mackenzie Global Fund, the Mackenzie U.S. Mid Cap Opportunities Fund and the Aristotle – IG U.S. Small Cap Equity Pool. The Canadian equity segments (Mackenzie – IG Canadian Equity Pool and Fidelity – IG Canadian Equity Pool), together comprise about 12% of the portfolio and contributed a commensurate portion of the aggregate return.
Most international equity components were lower, including the IG Mackenzie European Equity Fund, the IG Mackenzie European Mid-Cap Equity Fund, the IG Mackenzie Pan Asian Equity Fund and the IG Mackenzie International Small Cap Fund. The IG Mackenzie European Equity Fund was the weakest segment and the portfolio’s top detractor. It underperformed the MSCI Europe Index mainly due to stock selection in the financials sector.
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: Central banks to continue supporting economic growth
Looking ahead to 2025, we remain optimistic. Inflation is no longer a primary concern, allowing central banks to maintain accommodative policies. Political risks persist, but the global economic backdrop appears supportive, and corporate earnings are expected to improve. In the U.S., the election of Donald Trump has fueled expectations of pro-business policies, including tax cuts and deregulation, while central banks continue to reduce policy rates to support economic growth. Tariff discussions targeting several countries, including Canada, and renewed geopolitical tensions abroad will weigh on global investor sentiment. However, with diversified portfolios, investors are well-positioned to benefit from potential gains in both equity and fixed income markets.
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