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 March 31, 2025)

Growth of $10,000 (since inception)

Fund details (as of March 31, 2025)

Understanding returns

Annual compound returns (%)

Calendar year returns (%)

Range of returns over five years (November 1, 2009 - April 30, 2025)

Q1 2025 Fund Commentary

Market commentary

Global equities declined in the first quarter of 2025 while global bonds posted a modest gain (all returns in Canadian-dollar terms on a total return basis). Trade and policy changes from the new U.S. presidential administration raised concerns about a potential recession in the U.S.

The implementation of several tariffs by the U.S. affected key trading partners, including Canada, China and Mexico. Anticipation of retaliatory tariffs, which were to be enacted after the quarter-end, also weighed heavily on investor sentiment. As a result, the U.S. equity market posted a mid-single-digit loss, with the consumer discretionary sector performing weakly.

In contrast, Canadian equities gained, with the materials sector leading. Europe, Australasia, and the Far East (EAFE) equities also gained, outperforming both Canadian and U.S. equities, and driven by strong performances from Spain and Italy.

Emerging markets equities also rose but lagged their developed market peers, with notable gains from South Korea and Brazil.

The FTSE Canada Universe Bond Index gained 2.0%. Government bond prices rose as sovereign yields declined, outperforming corporate bonds, which also posted gains. However, corporate bond prices were impacted by widening credit spreads (the difference in yield between corporate and government bonds).

Within the corporate sector, infrastructure bonds saw the largest increase. High-yield bonds posted gains but underperformed investment-grade corporate bonds.

Global bond yields declined over the quarter, leading to an increase in global bond prices. The Bank of Canada, European Central Bank and Bank of England lowered their policy interest rates. The U.S. Federal Reserve Board maintained its rates, while the Bank of Japan raised its policy interest rate.

The yield on 10-year Government of Canada bonds fell by 25 basis points, from 3.22% to 2.97%, mirroring the decline in U.S. yields. In contrast, sovereign yields in the U.K., Germany and Japan increased.

Performance

Relative exposure to equities had a negative impact on performance.

Off-benchmark allocations to Canadian and global inflation-linked debt as well as private credit had a positive impact on performance. An underweight to U.S. equity was also positive.

Exposure to U.S. growth equities was negative for performance. Exposure to, and active management in, Canadian and global small- and mid-capitalization equities also had a negative impact.

Exposure to Foreign Bond had a positive impact because it held unhedged euro- and yen-denominated bonds, and those currencies appreciated against the Canadian dollar. An allocation to Emerging Markets was also positive because of stock selection in China.

Exposure to U.S. All Cap Growth had a negative impact on performance as U.S. growth stocks underperformed.

Portfolio activity

The sub-advisor added liquid alternatives to diversify the traditional asset classes held in the portfolio during the quarter.

The sub-advisor decreased relative exposure to Canadian fixed income and foreign equities to make room for the global alternatives asset class.

The sub-advisor eliminated exposure to the global dividend strategy.

Outlook

The most significant development so far in 2025 was the escalation in trade tensions, which suggests a major shift in the structure of global markets. The tariff-driven economic slowdown and weaker business sentiment have led to downward gross domestic product revisions. However, the latest activity data suggests a more resilient economy than initially anticipated.

The current global equity correction has similarities with past episodes where inflation and restrictive trade policies led to weakness before markets eventually stabilized. The sub-advisor believes 2025 should be a year of slower but positive growth, with opportunities emerging as policy uncertainty clears.

Given the stronger-than-expected escalation in trade tensions, the sub-advisor is lowering expectations for U.S. equities. The sub-advisor is adjusting positioning accordingly but recognizes the potential for recovery once macroeconomic concerns ease. History suggests volatility driven by trade concerns often resolves once underlying economic data stabilizes.

With the ongoing market uncertainty, the sub-advisor has emphasized sector diversification to limit exposure to market declines while keeping long-term exposure to recovery opportunities. Despite the uncertainty, the sub-advisor has a positive long-term stance on equities.

The sub-advisor believes the current environment underscores the importance of a globally diversified investment strategy that remains focused on long-term objectives.