The IG Core Portfolio – Growth rose (0.1%) over the first quarter of 2025, mainly due to strong performance from European equities. It outperformed the Global Equity peer group median, which declined (-0.9%).
Equity markets were mixed over the period. The S&P 500 Index (total return $CAD -4.6%) and Canada’s S&P/TSX Composite Index (total return 2.0%) touched record highs, only to then plunge in response to the U.S. tariff drama, which has pushed economic policy uncertainty to its highest level in several years and, in the eyes of many forecasters, significantly increased the risk of a recession in the U.S. and Canada. The MSCI EAFE Index Total Return (Net) $ CAD rose more than 7%, with European equities significantly outperforming North American markets.
European equity components (the IG Mackenzie European Equity Fund and the IG Mackenzie European Mid-Cap Equity Fund) and the BlackRock – IG International Equity Pool, which has substantial exposure to Europe, were the portfolio’s top performers. Of these three, the IG Mackenzie European Equity Fund had the largest weight in the portfolio and therefore was the top contributor. The BlackRock – IG International Equity Pool was the portfolio’s best performer. It outperformed the MSCI EAFE Index mainly due to stock selection in the U.K. and Japan, especially in the financials and health care sectors. European economic data generally exceeded expectations during the period, while the European Central Bank, Bank of England and Swiss National Bank have all been cutting interest rates. Recent political changes, especially the German election, have led to more aggressive fiscal policies that support economic growth. Most other (non-U.S.) equity components, as well as the BlackRock – IG Active Allocation Pool, made modest gains.
Most U.S. equity components (the T. Rowe Price – IG U.S. Equity Pool, the Mackenzie IG U.S. Equity Pool, the Mackenzie U.S. Mid Cap Opportunities Fund and the Aristotle – IG U.S. Small Cap Equity Pool), which together comprise half of the portfolio, declined and detracted from performance. The one exception in this group was the Mackenzie – IG Low Volatility U.S. Equity Pool, which posted a small gain. The T. Rowe Price – IG U.S. Equity Pool was the top detractor. However, it outperformed the S&P 500 Index, mainly due to stock selection in the consumer discretionary sector (especially a lack of exposure to Tesla Inc.). The Aristotle – IG U.S. Small Cap Equity Pool was the portfolio’s weakest performer, as small-capitalization stocks broadly underperformed large-caps. However, it too outperformed its benchmark (Russell 2000 Index Total Return (Net) $ CAD). The Wellington – IG Global Equity Hedge Pool, which has substantial U.S. equity exposure, also fell.