iProfile™ Private Discretionary Portfolio – Global Equity
Portfolio commentary Q1 2024
Highlights
① The portfolio had a solid start to 2024 due to strong global equity markets.
② Central banks face divergent monetary policies.
③ Market momentum and encouraging economic data point to more upside potential in 2024.
Portfolio returns: Q1 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (March 15, 2021) |
iProfile Private Discretionary – Global Equity Series I |
3.02 |
9.19 |
9.19 |
18.48 |
8.88 |
8.81 |
Portfolio overview
The iProfile™ Discretionary Portfolio – Global Equity rose over the period (9.2%) but slightly underperformed its global equity peer group median (9.5%), as stocks gained ground in most regions. All of the iProfile pools comprising the portfolio were higher, as were all individual sub-advised constituent mandates.
Stocks globally continued the push higher in 2024, as solid economic growth in the U.S. shifted the consensus view of the U.S. economy from gliding down for a “soft landing” to a growing belief that the U.S. won’t experience any meaningful slowdown at all. Meanwhile, the U.S. Federal reserve reaffirmed that interest rate tapering would happen “fairly soon”. Most other central banks, including the Bank of Canada and the European Central Bank, also remained on the sidelines. In contrast, the Bank of Japan raised its rates for the first time since 2007 during the period, ending the world’s last remaining negative interest rate policy. Nonetheless, Japanese yields rose in tandem with those elsewhere.
Equity returns were especially strong in the U.S. (13.3%), led by stocks in the communication services (18.7%), energy (16.5%) and information technology (15.5%) sectors. EAFE (8.5%), Canada (6.6%) and emerging markets (4.7%) all underperformed the U.S. In this environment, gains in the portfolio came mostly from constituents that contained substantial U.S. equity content. In addition to the iProfile U.S. Equity Private Pool (13.5%), these included the iProfile ETF Private Pool (11.3%) and the iProfile Low Volatility Private Pool (8.2%). In the U.S. equity pool, six of the seven sub-advisors (all but the small-cap segment) delivered double-digit percentage returns, benefitting mostly from stock selection in the consumer discretionary (especially in the automobiles and auto components groups) and information technology (semiconductors) sectors. The iProfile Active Allocation Private Pool IV (7.7%) and iProfile Canadian Equity Private Pool (5.7%) were also significant contributors, due in part to their significant weight allocations in the portfolio.
The iProfile Alternatives Private Pool (4.3%) and the iProfile Emerging Markets Private Pool (4.8%) were the weakest portfolio components. In the alternatives pool, the Mackenzie Global Macro Fund lagged most equity indices, mainly due to losses on put options on U.S. equities. The emerging markets pool trailed major developed markets, mainly due to losses in China, which represents more than one quarter of EM benchmarks.
*Sources:
- All returns in Canadian dollars.
- CIFSC peer category performance as per Lipper (Refinitiv).
- Canadian equity return = S&P/TSX Composite Index Total Return.
- U.S. equity market return = S&P 500 Index Total Return, Canadian dollars.
- EAFE market return = MSCI EAFE Index Total Return (net), Canadian dollars.
- Emerging markets return = MSCI Emerging Markets Index Total Return (net), Canadian dollars.
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: Exceptionally strong quarter leads to investor confidence.
As we look ahead, the market's optimism has notably improved from six months ago. U.S. equity markets appear to be priced to perfection, and continued positive economic news is essential to support valuations in the near term. Canadian markets, meanwhile, have been riding the surging wave of global crude prices. This boon from the energy sector is bolstering the country's economic and stock market performance, providing a buffer that could mitigate the impact of a sluggish consumer sector, should higher oil prices persist.
Internationally, markets are on the upswing, rallying from a period of low stock valuations and slow manufacturing. Historically, these signs have often led to a phase of strong economic growth.
We’re encouraged by the momentum in the markets and inflection points in the economic data to the upside, and that leaves us with an optimistic view for investors through the remainder of 2024.
To discuss your investment strategy, speak to your IG Consultant.
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 Consultant before investing. The rate of return is the historical annual compounded total return as of March 31, 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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