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.