| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jul 12, 2013) |
IG Managed Growth Portfolio – Global Equity Balanced F |
2.90 |
7.87 |
7.87 |
17.34 |
5.70 |
6.96 |
6.48 |
7.14 |
Quartile rankings |
1 |
1 |
1 |
1 |
2 |
2 |
2 |
It was a positive 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.
In Canada, the S&P/TSX Composite Index was up 6.6% during the quarter, led by health care (18.4%) and energy (13.1%), while communication services (-8.5%) and utilities (-1.1%) detracted. In the U.S., the S&P 500 Index returned 10.6% in local currency terms (13.5% in Canadian dollars), led by information technology (14.4%) and consumer discretionary (11.1%), while utilities (-5.0%) and consumer staples (-3.2%) detracted. In developed markets, the MSCI EAFE Index returned 10.1% in local currency terms (8.7% in Canadian dollar terms) with Japan (19.3%) and Italy (16.5%) leading performance, while Hong Kong (-11.5%) was among the weakest performers. Global fixed income markets were down as bond yields climbed across the board. The ICE BofA Global Broad Market Bond Index (hedged to Canadian dollar) was down 0.4%. Canadian bonds were also down as the FTSE Canada Universe Bond Index returned -0.9%. High-yield bonds were up, with the ICE BofA U.S. High Yield Bond Index (hedged to Canadian dollar) returning 1.4%.
Mackenzie – IG U.S. Equity Pool, the Mackenzie – IG Canadian Equity Pool, and the Mackenzie EAFE Equity Pool were the largest contributors. Mackenzie – IG U.S. Equity Pool posted a positive return, but underperformed its benchmark, with security selection in the financials sector as the leading detractor. Mackenzie – IG Canadian Equity Pool posted a positive return but slightly underperformed its benchmark, with security selection in the materials sector as the leading detractor. Mackenzie EAFE Equity Pool posted a positive return but underperformed its benchmark, with security selection in the financials sector as the leading detractor.
Mackenzie Enhanced Fixed Income Risk Premia Fund was the sole detractor in the portfolio. Mackenzie Enhanced Fixed Income Risk Premia Fund is a levered fixed income fund. The investment team uses leverage to manage total portfolio fixed income exposure in a capital efficient way. Rising bond yields over the period resulted in a decline in the fund’s returns.
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.
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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