Q1 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Canada’s economy navigated a challenging first quarter as trade uncertainty continued to weigh on business confidence and manufacturing activity. Employment fell in January and February before stabilizing in March, when the economy added 14,000 jobs and the unemployment rate held steady at 6.7%. Consumer spending remained cautious, and trade-sensitive industries faced ongoing pressure from tariff uncertainty.

The Bank of Canada held its policy rate at 2.25% at both its January and March meetings, citing moderating inflation and persistent uncertainty in the near-term economic outlook. Canada’s inflation rate eased to 1.8% in February, the softest reading in several months, suggesting that domestic price pressures were well contained ahead of the energy price shock that emerged later in the quarter.

The Canadian equity market outperformed global peers in the first quarter, gaining about 4%. The energy sector was the standout contributor, rising sharply after crude oil prices surged following the outbreak of the conflict in the Middle East and the closure of the Strait of Hormuz in early March. Materials also contributed to gains as gold prices hit a record high of USD$5,589 per ounce in January before pulling back. Broader sectors, including information technology and consumer discretionary, lagged as investors rotated toward commodity-linked names amid rising geopolitical uncertainty.

Performance

At a sector level, security selection in the materials and financials sectors and allocation in the information technology sector contributed to the Fund’s performance. From a factor perspective, the sub-advisor’s stock selection model contributed, led by growth and value factors. Stock-specific risk also contributed. In addition, a smaller size bias contributed to performance.

Transcontinental Inc. contributed to the Fund’s performance. The packaging, printing and media company benefited from resilient packaging demand and disciplined cost management. Parex Resources Inc. also contributed to performance, supported by solid production results and favourable energy prices. 5N Plus Inc. contributed as improving demand across advanced materials applications supported share price performance.

At a sector level, stock selection and allocation in the consumer discretionary sector and underweight exposure to the energy sector detracted from the Fund’s performance. The quality factor and long exposure to market sensitivity detracted from performance.

Imperial Oil Ltd., Canadian Natural Resources Ltd. and Suncor Energy Inc. detracted from the Fund’s performance as the Fund was underweight these names. These underweight positions weighed on results as energy equities performed strongly during the period, supported by firmer crude oil prices and resilient upstream fundamentals.

Portfolio activity

Portfolio activity during any given quarter is an outcome of disciplined process that is largely driven by stock selection, optimization and a vetting process that runs on a daily basis.