iProfile™ Private Discretionary Portfolio – Global Equity
Portfolio commentary Q3 2024
Highlights
① The portfolio rose over the period as all component iProfile Private pools were higher, led by the iProfile Canadian Equity Private Pool.
② Active central bank policies were key market drivers.
③ The market environment improved as interest rates fell.
Portfolio returns: Q3 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (March 15, 2021) |
iProfile Private Discretionary – Global Equity Series I |
2.09 |
5.64 |
18.40 |
27.17 |
9.36 |
9.98 |
Portfolio overview
The iProfile™ Discretionary Portfolio – Global Equity rose over the period (+5.7%) as global inflation cooled, economic data reinforced expectations for a U.S. soft-landing, and the U.S. Federal Reserve (the Fed) surprised investors with a 50-basis-point interest-rate cut. The portfolio outperformed its Global Equity peer group median (+4.8%) and benefited most from its exposure to equities in Canada. The underperformance of its U.S. equity exposure and its exposure to alternative investments weighed most on relative results.
Equity returns were especially strong from the iProfile Canadian Equity Private Pool (+9.1%), which contributed about one quarter of the total gains. The Canadian equity pool was the portfolio’s strongest segment over the period, but it underperformed the S&P/TSX Composite Index Total Return (10.5%). The pool benefited most from a significant underweight exposure to the underperforming energy sector. However, an overweight exposure to and stock selection in the industrials sector detracted from results. The iProfile Low Volatility Private Pool was also especially strong (+8.4%) and outperformed the MSCI World Index Total Return (Net) $ CAD as low-volatility indices outperformed non-low-volatility benchmarks in all major regions. Among the low-volatility pool segments, Canadian equities performed best.
The MSCI World Index Total Return $ CAD (+5.4%), weighed down by its underperforming U.S. equities, was bested by most other portfolio components, including the iProfile™ Emerging Markets Private Pool (+6.0%), the iProfile™ International Equity Private Pool (+5.8%) and the iProfile™ Active Allocation Private Pool IV (+5.8%). However, the emerging markets and international pools slightly underperformed their benchmark MSCI Emerging Markets Index (+7.5%) and MSCI EAFE Index (+6.0%), respectively.
The iProfile™ Alternatives Private Pool rose (+1.1%) but was the weakest component pool of the iProfile portfolio. The pool’s underperforming of major global benchmarks is expected in periods of strong capital markets, as it is intended to provide a steadying influence when used as a diversifying component of broader portfolios. The iProfile U.S. Equity Private Pool (+3.6%) is the portfolio’s largest component pool but was the weakest pure equity pool in the portfolio. It underperformed the S&P 500 Index Total Return $ CAD (+4.6%) mainly due to stock selection in the consumer discretionary and financials sectors. Among the U.S. pool’s components, the J.P. Morgan-managed value segment was the top performer, while the American Century Investments-managed growth segment was the weakest, reflecting the broad outperformance of value over growth in the market over the period. The iProfile ETF Private Pool (+5.2%) also slightly underperformed the MSCI World benchmark, mainly due to its U.S. equity exposure.
Market overview: markets rallied with expanding breadth
Investor sentiment shifted to a “risk-on” attitude in the third quarter, in response to changes in central bank monetary policy across key economies. It began with the Bank of Canada (BoC) and the European Central Bank (ECB) in the second quarter and continued into the third. The BoC was particularly active, making two additional cuts of 25 basis points (0.25 percentage points) to its overnight rate this quarter.
The U.S. Federal Reserve (the Fed) started its own policy easing with a surprise 50 basis-point (0.5-percentage-point) cut in mid-September, launching rallies in both bonds and equity markets. The Fed noted an increase in the unemployment rate and that the battle against inflation was no longer a primary reason to maintain a restrictive monetary policy.
Market outlook: the market environment is generally improving
Looking ahead, central banks in Canada and the United States will continue to focus on supporting labour markets. Stimulus measures in China could help boost domestic consumer demand by propping up the Chinese stock market, property market and economy. Despite geopolitical risks from the Middle East conflict and the upcoming U.S. election, the market environment is improving.
We see a soft-landing scenario emerging in the U.S. and other areas around the world. This should support equity markets and help bond returns, as interest rates continue to fall from where they are today.
To discuss your investment strategy, speak to your IG Advisor.
Commissions, fees and expenses may be associated with mutual fund investments and the use of iProfileTM Managed Asset Program. Read the prospectus and speak to an IG Advisor before investing. The rate of return is the historical annual compounded total return as of September 30, 2024, 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. An asset allocation service, iProfile is a managed asset program for clients with a minimum of $250,000 invested in the iProfile program. 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.
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