Portfolio returns: Q3 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 19, 2022) |
IG Mackenzie U.S. Dollar Fund – Global Equity F |
0.83 |
4.77 |
19.13 |
30.09 |
10.29 |
|||
Quartile rankings |
4 |
4 |
1 |
2 |
IG Mackenzie U.S. Dollar Fund – Global Equity Series F
Portfolio commentary
Q3 2024
Highlights
① The fund gained over the quarter, buoyed by a strong economic backdrop that supported equity returns.
② Financials stocks drove fund performance.
③ Stock selection in the information technology and consumer staples sectors was a major contributor to fund performance.
Portfolio overview
It was a strong quarter for equity investors. The U.S. stock market soared in Q3 2024, as the S&P 500 extended its rally, marking its best performance since 1997. The financials, utilities and real estate sectors led this growth. Corporate earnings in the information technology and consumer discretionary sectors rebounded sharply, boosting market optimism. Small-cap and value stocks also contributed to the upward momentum. However, job growth slowed, with the unemployment rate rising. Inflation eased, with CPI dropping below 3%, allowing the U.S. Federal Reserve (the Fed) to consider a 100-basis-point rate cut by year-end.
Within this economic and market backdrop, the IG Mackenzie U.S. Dollar Fund – Global Equity produced a positive return. Selection of information technology stocks, primarily from the U.S., added significant value to performance, as did selection in the consumer staples and materials sectors. Zero exposure to Canadian stocks was a detractor to returns as Canada was a top performing equity market this quarter. Underweight exposure to the real estate and utilities sectors detracted from performance as those particular sectors performed extremely well.
The fund hedges its currency exposure back to the U.S. dollar. For Q3 2024, hedging detracted from performance as foreign currencies tended to appreciate against the U.S. dollar.
Market overview: markets rallied with expanding breadth
Investor sentiment shifted to a “risk-on” attitude in the third quarter, in response to changes in central bank monetary policy across key economies. It began with the Bank of Canada (BoC) and the European Central Bank (ECB) in the second quarter and continued into the third. The BoC was particularly active, making two additional cuts of 25 basis points (0.25 percentage points) to its overnight rate this quarter.
The U.S. Federal Reserve (the Fed) started its own policy easing with a surprise 50 basis-point (0.5-percentage-point) cut in mid-September, launching rallies in both bonds and equity markets. The Fed noted an increase in the unemployment rate and that the battle against inflation was no longer a primary reason to maintain a restrictive monetary policy.
Market outlook: strategic diversification for longer-term stability
The team believes that while U.S. economic growth is slowing and the job market shows early signs of weakening, the U.S. is not entering a recession. High federal spending continues to boost growth, and anticipated federal funds rate cuts by the Fed should stabilize the labour market and the economy. Despite recent volatility, U.S. equities are supported by solid corporate earnings and the Fed’s dovish stance. The U.S. bond market is expected to benefit from rate cuts, with positive returns as yields decline and prices rise.
The team sees increased benefits in duration exposure due to expected rate cuts by developed central banks. Given high global equity valuations, they favour diversifying into more affordable markets with positive economic catalysts, such as Europe and Asia. They emphasize maintaining a well-diversified portfolio to manage risk and achieve long-term financial stability.
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 September 30, 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.
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