Portfolio returns: Q2 2026
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. July 12, 2013 |
IG Core Portfolio – Income F | 0.33
| 1.15
| 1.65
| 3.13
| 4.67
| 2.65
| 2.65
| 2.79
|
Quartile rankings | 2 | 2 | 1 | 2 | 3 | 2 | 1 |
IG Core Portfolio – Income Series F
Q2 commentary 2026
Highlights
① The portfolio generated positive returns during the period, driven primarily by strong performance in Canadian fixed income.
② Exposure to short-term bonds contributed to portfolio performance.
③ Exposure to Canadian corporate bonds contributed during the period.
Portfolio Overview
The second quarter delivered a changing of the guard at the Federal Reserve, an interim peace deal with Iran and a bond market that finally stopped pricing hope. Canada spent the quarter debating whether it was in recession, with the Bank of Canada holding at 2.25% in April and June and core inflation near 2% with little energy pass-through.
Canadian government bond yields exhibited notable intra-quarter volatility during Q2 2026, peaking in mid-May before closing lower by the end of June. The 10-year benchmark yield hit a peak of 3.70% on May 19 and subsequently declined to a low of 3.38% by June 30. At the close of June, the two-year and five-year yields finished at 2.74% and 3.01%, respectively, preserving an upward-sloping yield curve.
These fluctuations were catalyzed by specific macroeconomic events. The mid-May surge in yields was fuelled by elevated energy prices and conversely, an interim peace agreement with Iran alleviated energy-related inflation concerns. Yields were further depressed, led by softer-than-expected U.S. labour market data, which prompted markets to price in impending global monetary easing, and exerted downward pressure on longer-term duration.
During the quarter, the portfolio generated positive returns with fixed income and real assets posting positive results. The portfolio's performance was heavily driven by its core fixed income sleeve, and within that, the IG Mackenzie Mortgage and Short Term Income Fund was the largest driver of absolute performance, benefitting from its highest weight.
The exposure to Mackenzie - IG Canadian Corporate Bond Pool translated into a strong contribution, demonstrating the benefits of active credit exposure. Defensive and liquid sleeves also supported the portfolio positively during the quarter. Outside of core fixed income, the IG Mackenzie Real Property Fund also added to returns.
Market overview: earnings strength helped markets absorb uncertainty
The second quarter of 2026 reinforced the resilience of financial markets. Investors faced conflict in the Middle East, commodity-price volatility, shifting interest-rate expectations and renewed inflation concerns, yet global equities continued to advance as corporate earnings and economic activity remained stronger than expected. The S&P 500 gained 14.9% in U.S.-dollar terms for the quarter, while the S&P/TSX Composite Index advanced 6.4%, supported by healthier earnings expectations and improving market breadth.
Canadian equities were led by a strong rebound in financials, as better-than-expected bank earnings, resilient credit quality and improved capital markets activity lifted sentiment. U.S. equities were supported by earnings strength rather than a simple risk-on rally, with Information Technology leading as AI infrastructure spending continued to anchor sentiment. International equities also contributed meaningfully, with emerging markets Korea and Taiwan benefitting from demand across the global technology supply chain.
Market outlook: Iran peace accord drags energy prices and yields lower
The broader economic data indicates that Canada's recent growth bounce was a temporary correction rather than a full recovery. Although April GDP grew by 0.5% month-over-month, May's flash estimate slowed to just 0.1%. Domestically, the labour market remained soft, business investment continued to contract due to tariff and Canada United States Mexico Agreement (CUSMA) uncertainties, and the mortgage reset cycle persisted as a major drag. These structural weaknesses give the Bank of Canada substantial room to ease policy. Canadian fixed income presents an increasingly attractive opportunity as domestic economic headwinds diverge significantly from the stronger U.S. macro backdrop, paving the way for monetary easing. We expect the Bank to implement a 25-basis-point rate cut before the end of the year. This divergent policy path makes owning Canadian fixed income directly against U.S. duration a key play for the upcoming quarters.
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