Q2 2026 Fund Commentary

Commentary and opinions are provided by AGF Investments Inc..

Market commentary

Canadian equities rose for the period. Equities gained in April but were more volatile in May and June amid Middle East tensions and fluctuating energy prices. Canada’s economy contracted for the second consecutive quarter through March, while inflation rose, with the Consumer Price Index rising from roughly 1.8% in February to 3.2% by May. Labour market conditions cooled, but the Bank of Canada held its policy rate at 2.25%. The Canadian dollar softened, with the U.S. dollar rising about 2.3% against the Canadian dollar.

Resources were the main drag on Canada’s equity market. Crude oil prices fell sharply, with West Texas Intermediate down roughly 31% as geopolitical risk premium faded. In the materials sector, mining companies, including gold producers, were weakest.

The Canadian financials sector led market performance, supported by net interest income and credit conditions across the banks. Health care, and the more domestically oriented consumer areas of the market, also performed well. Materials was the weakest sector as miners fell, followed by communication services and energy, the latter pressured by lower oil prices. Growth outpaced value stocks, and large-capitalization stocks outperformed smaller-capitalization stocks.

Performance

At a sector level, underweight exposure to the materials sector contributed to the Fund’s performance, as did overweight exposure to the health care sector. Stock selection in the information technology and communication services sectors also contributed to performance.

The Fund’s relative exposure to Eli Lilly and Co., Morgan Stanley and NVIDIA Corp. contributed to performance. Eli Lilly’s shares surged because of demand growth for its anti-obesity drug, improved forecasts for 2026 and the approval of its oral GLP-1 treatment. Morgan Stanley benefited from trading revenues and wealth management inflows amid heightened market volatility. NVIDIA shares rose because of increased spending for factory capacity expansion, record data centre revenue and high shareholder returns.

Underweight exposure to the consumer discretionary and real estate sectors detracted from the Fund’s performance. Selection in the materials and industrials sectors also detracted from performance.

Relative exposure to Agnico Eagle Mines Ltd., WSP Global Inc. and Canadian Natural Resources Ltd. detracted from performance. Agnico Eagle Mines’ stock fell as investors locked in gains following its gold-driven outperformance. WSP Global shares fell because of the company’s higher debt following a recent acquisition. Shares of Canadian Natural Resources fell as weaker crude oil prices, easing supply concerns and overall ex-dividend trading pressured energy stocks.

Portfolio activity

There were no significant trades made in the Fund during the period.

Outlook

The Fund is positioned with underweight exposure to the financials, materials and energy sectors. This positioning reflects the sub-advisor’s caution on domestic banks amid a softer Canadian economy and housing market drag, and on commodity producers, given volatile oil and gold prices. The Fund has overweight exposure to utilities, industrials and select consumer stocks geared to demand, such as electrification and the data-centre buildout.