Portfolio returns: Q1 2024
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Fixed Income Balanced F |
1.56 |
2.29 |
2.29 |
6.12 |
3.19 |
|||
Quartile rankings |
2 |
3 |
3 |
3 |
Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (Apr 11, 2022) |
IG U.S. Taxpayer Portfolio – Global Fixed Income Balanced F |
1.56 |
2.29 |
2.29 |
6.12 |
3.19 |
|||
Quartile rankings |
2 |
3 |
3 |
3 |
IG U.S. Taxpayer Global Fixed Income Balanced Portfolio had positive total returns over Q1 2024, slightly underperforming its Global Fixed Income Balanced peer group by 39 bps on a net-of-fee basis (2.29% versus 2.58%).
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.
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.
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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