A portfolio fund aiming to provide a balance between income and long-term growth.

Is this fund right for you?

• You want investment income and you want your money to grow over time.
• You want to invest in both equity funds and fixed-income funds (up to 40 per cent).
• You're comfortable with a low to moderate level of risk.

Risk Rating

How is the fund invested? (as of December 31, 2024)

Growth of $10,000 (since inception)

Fund details (as of December 31, 2024)

Understanding returns

Annual compound returns (%)

Calendar year returns (%)

Range of returns over five years (November 1, 2009 - February 28, 2025)

Q4 2024 Fund Commentary

Market commentary

Global equities rose over the fourth quarter of 2024 and outperformed global bonds, which declined (all returns in Canadian-dollar terms on a total return basis). Interest-rate cuts from major central banks supported investor sentiment. Concerns about tariffs and an expected slowdown in rate cuts from the U.S. Federal Reserve Board (Fed) limited the positive sentiment towards risk assets.

A decline in the Canadian dollar added to the Canadian-dollar returns of global equity markets. The U.S. equity market posted a high-single-digit return, with the consumer discretionary sector outperforming. Canadian equities rose but underperformed U.S. equities. Information technology was the strongest-performing sector in the Canadian equity market.

EAFE equities declined, underperforming Canadian and U.S. equities. France and Switzerland underperformed. Emerging markets equities also declined, with China and India underperforming.

The FTSE Canada Universe Bond Index posted a small loss. As sovereign yields increased, government bond prices declined and underperformed corporate bonds, which posted a gain.

Corporate bonds benefited from narrowing credit spreads (the difference in yield between corporate and government bonds with similar maturities). Energy bonds posted the largest increase in the corporate sector. High-yield bond prices rose on a total return basis and outperformed investment-grade corporate bonds.

Global bond yields rose and global bond prices fell. The Fed, Bank of Canada, European Central Bank and Bank of England lowered their policy interest rates. The yield on 10-year Government of Canada bonds rose by 27 basis points (from 2.95% to 3.22%). Sovereign yields in the U.S., the U.K., Germany and Japan also rose.

Performance

The underlying Canadian equity funds underperformed, which had the most negative impact on performance. The underlying foreign equity funds also had a negative impact.

An overweight to corporate bonds, including high-yield debt and private credit, was positive for performance given narrowing credit spreads and a higher running yield. The allocation to U.S. equity funds was also positive as the U.S. outperformed other regions and because of the strong performance of growth-oriented holdings.

Active management within Canadian and foreign equity strategies was negative for performance. The allocation to off-benchmark small- and mid-capitalization equities also had a negative impact.

Exposure to U.S. All Cap Growth had a positive impact. Growth stocks outperformed over the quarter. Stock selection in information technology and underweight exposure to consumer staples was also positive. Exposure to American Growth had a positive impact because of strong stock selection in the health care, industrials and information technology sectors.

Exposure to Global Small-Mid Cap Equity had a negative impact on performance. Sector positioning and stock selection were negative, and small-cap companies broadly underperformed large-cap stocks. Exposure to Global Growth Opportunities was also negative because of stock selection in the information technology sector.

The sub-advisor decreased relative exposure to Canadian corporate bonds to take advantage of narrow credit spreads and increase exposure to Canadian core bonds. The sub-advisor wanted more flexible credit exposure.

The sub-advisor decreased relative exposure to global equities to increase exposure to U.S. equities from an underweight position to neutral.

Relative exposure to Canadian value and dividend strategies was increased to better align the style mix with the sub-advisor’s outlook.

Similarly, relative exposure to Canadian growth and small- to mid-cap strategies was decreased to better align the style and size mix with the sub-advisor’s outlook.

Outlook

The global economy is expected to grow in 2025 at a similar rate to 2024. The sub-advisor believes tariffs and other trade policies are a key risk, and ongoing negotiations could be top-of-mind for markets. Regions with strained growth prospects include China, because of structural growth issues, and the eurozone, which may be stuck in a period of very low growth.

The sub-advisor expects geopolitics to drive investor sentiment. However, the sub-advisor sees U.S.-China tensions as a more enduring geopolitical issue that could be felt over years rather than months.

In fixed income, the sub-advisor expects higher interest rates to weigh on government bonds globally. Central bank policy rates are likely to settle at rates higher than originally expected, in the sub-advisor’s view. In equity markets, the sub-advisor believes U.S. equities are poised for continued strength even though valuations are more compelling elsewhere.

Despite two consecutive calendar years of above-average gains from stock and bond markets, the sub-advisor believes these markets still offer potential in 2025. The sub-advisor views its commitment to diversification across asset classes, as not only a critical safeguard against near-term market declines, but more importantly as a long-term driver of compelling risk-adjusted performance.