Portfolio returns: Q1 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (April 19, 2022) |
IG Mackenzie U.S. Dollar Fund – Global Neutral Balanced F |
1.96 |
4.43 |
4.43 |
11.50 |
5.41 |
|||
Quartile rankings |
3 |
1 |
1 |
2 |
IG Mackenzie U.S. Dollar Fund – Global Neutral Balanced Series F
Portfolio commentary
Q1 2024
Highlights
① The fund was up in the quarter, outperforming its benchmark.
② The fund’s equity contributed to total returns buoyed by a strong economic backdrop that supported global equities, but underperformed its benchmark.
③ The fund’s fixed income positions detracted from total returns but outperformed its benchmark and contributed to relative outperformance.
Portfolio Overview
It was a strong quarter for equity investors, helped by resilient economic data in the U.S. coming in stronger than initially expected, benefiting global equities overall. However, it was a more challenging period for fixed income investors, with sticky inflation and strong economic growth shifting expectations for interest rate cuts by the Federal Reserve down to three instead of the six forecasted at the start of the year, putting pressure on bond prices as yields climbed.
The fund was up for the quarter, outperforming its benchmark. The fund’s fixed income positions contributed to relative performance while equity positions dragged. The top contributors were government bonds and the information technology sector. Conversely, the financials and consumer discretionary sectors were the biggest detractors to relative performance.
Market overview: Leap year liftoff – Q1's market highs.
In the first quarter, equity markets delivered a solid performance, reinforcing the sentiment that inflation is nearly under control and recession fears for the U.S. economy are subsiding.
The U.S. maintained a positive economic outlook, whereas Canada has experienced several months of subdued GDP growth, highlighting divergent economic narratives between the two closely linked markets. This contrast may lead the Bank of Canada to enact policy changes before the U.S. Federal Reserve, to address Canada's specific economic hurdles.
Market outlook: Continued U.S. economic resilience reduces urgency for rate cuts.
The team believes that Q1 GDP growth in the U.S. will continue the up trend from 2023 and reduce the Federal Reserve’s urgency in initiating rate cuts. The team does not see inflation stabilizing at 2% over the next few months given the uptick in various inflation measures and the continued strength of the U.S. economy. The team thinks the Federal Reserve will err towards keeping rates tighter than what classic monetary policy would suggest.
The situation in Canada appears more dire than in the U.S. With both headline and core inflation rates in Canada collapsing below 2% on a three-month annualized basis, the team believes that the Bank of Canada will be ready for cuts soon and will do so at a steady pace and get back to neutral in 2025. The team believes that population growth and government deficits will keep pressure on long-term yields, but the yield curve will steepen.
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