Portfolio returns: Q1 2025
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Target Education 2030 Portfolio F |
-2.23
|
0.26
|
0.26
|
9.60
|
10.37
|
|||
Quartile rankings |
4 |
4 |
4 |
2 |
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Jan 30, 2023) |
IG Target Education 2030 Portfolio F |
-2.23
|
0.26
|
0.26
|
9.60
|
10.37
|
|||
Quartile rankings |
4 |
4 |
4 |
2 |
The IG Target Education 2030 Portfolio underperformed its benchmark over the quarter. Asset allocation, sector rotation and manager selection faced headwinds, while country positioning in equities was positive.
Asset allocation positioning detracted over the quarter. The portfolio positioned overweight equities and underweight duration, which was negative as yields fell in most economies on growth fears. Sector positioning in U.S. equities was also negative, with overweight allocations to the industrials and information technology sectors as the main detractors, while an overweight allocation to the health care sector was additive. Within country positioning in equities, an overweight position in Taiwan detracted while overweight positions in Italy and Spain were additive. Active equity managers were challenged over the quarter with allocations detracting across all three U.S. and Canadian funds (T. Rowe Price – IG U.S. Equity Pool, Fidelity – IG Canadian Equity Pool, Mackenzie – IG Canadian Equity Pool).
Investor sentiment turned cautious in the first quarter of 2025, driven by heightened market uncertainty following significant shifts in U.S. trade policy under President Trump. Abrupt tariff changes targeting major trade partners — notably Canada, Mexico and China — increased volatility and pressured equity market performance, particularly affecting the S&P 500 Index. In contrast, European markets outperformed significantly, reflecting investors' preference for Europe's attractive valuations and perceived stronger growth potential.
Despite trade-related headwinds, global manufacturing activity showed resilience, signalling potential earnings growth ahead, provided trade tensions stabilize. Central banks diverged in response: the Bank of Canada proactively lowered its overnight rate to 2.75% to bolster growth amid trade uncertainties, while the U.S. Federal Reserve maintained its rate at 4.5%, viewing tariff-related inflation impacts as temporary.
The tariff anticipation and announcement from the White House has been the central focus for markets over the quarter, particularly in the last week. While the initial reaction to tariffs has focused on the negative implications for growth, we believe that the market is underappreciating that recent tariff announcements represent a sizeable shock to the U.S. price level and raise the risk of higher inflation, which should ultimately be negative for bonds. As such, we have recently added to fixed income underweight allocations as we believe that bonds are overpriced at current levels of yields, as well as moved underweight sectors that closely track interest rates (i.e., utilities).
The market’s attention is likely to shift towards more growth-positive fiscal policy developments abroad and in the U.S., particularly the potential for offsetting tax cuts that may amplify consumption; notably, these would further challenge long-term inflation dynamics. Structural fiscal shifts in Europe to meaningfully increase defense and infrastructure spending, as well as loosen the debt brake, are also a clear positive growth impulse for the Eurozone and globally. We have overweight positions in developed market European countries (Sweden, Switzerland and the U.K.), and have closed underweight positions in France and Germany in recent weeks.
Structurally, the shift in trade policy may pressure the U.S. assets (dollar, bonds and equities in the global cross-section) as foreign holders of U.S. assets demand higher-risk premia or begin to repatriate capital.
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 March 31, 2025, 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.
This commentary may contain forward-looking information which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 31, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.
This commentary is published by IG Wealth Management. It represents the views of our Portfolio Managers and is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
© Investors Group Inc. 2025