Portfolio returns: Q1 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Equity Balanced F |
2.70 |
6.99 |
6.99 |
15.33 |
8.48 |
|||
Quartile rankings |
1 |
2 |
2 |
1 |
IG U.S. Taxpayer Portfolio – Global Equity Balanced Series F
Portfolio commentary
Q1 2024
Highlights
① IG U.S. Taxpayer Global Equity Balanced Portfolio outperformed its Global Equity Balanced peer group over the quarter on a net-of-fee basis.
② Outperformance mainly driven by a higher allocation to equities and a lower allocation to fixed income versus peers.
③ We maintain this asset class allocation based on our view of global reflationary dynamics and seek to allocate to the most attractive countries and sectors within equities.
Portfolio Overview
IG U.S. Taxpayer Global Equity Balanced Portfolio had positive total returns over Q1 2024, outperforming its Global Equity Balanced peer group by 20bps on a net fee basis (6.99% versus 6.79%).
A higher allocation to equities and a lower allocation to fixed income versus peers was positive in the first quarter, given the Federal Reserve held off on rate cuts. Within equities, a lower exposure to U.S. equities versus peers was the primary detractor over the quarter. Within U.S. equity sectors, more exposure to the communication services and energy sectors versus the S&P 500 Index was additive to performance, while less exposure to the industrials and health care sectors weighed on performance. Preference for Japan, Taiwan and Italy versus a global market cap weighted index was also additive.
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: Macro Data Realigning to a Reflationary Theme.
Macro markets spent the final months of 2023 embedding an incrementally more pessimistic view on economic growth and an associated dovish outlook for inflation and central bank policy. As market pricing moved away from our relatively constructive macro outlook, we increased the size of our underweight duration and overweight equity positions in December and continued to do so in early 2024. Since then, macro markets have started to realign more closely with our central case that growth can remain elevated while inflation is slower to come down. Our analysis of market pricing suggests that there is scope for procyclical positioning to run further, despite rate cuts being priced out for 2024, given a re-acceleration in the manufacturing cycle, procyclical fiscal policy, and continued labour market strength.
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