Q2 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Canada’s economy stayed under pressure in the second quarter as trade uncertainty continued to weigh on business confidence, though the labour market showed signs of stabilizing. Employment picked up in May, and the unemployment rate eased to 6.6%. Inflation accelerated, with the annual pace rising to 3.2% in May from 2.8% in April, as higher gasoline prices linked to the conflict in the Middle East pushed up energy costs. Core inflation measures held closer to 2%.

The Bank of Canada (BoC) held its policy rate at 2.25% at both its April and June meetings, its fourth and fifth consecutive holds. The BoC said it was looking through the temporary effect of higher energy prices while watching for signs that price pressures were becoming more persistent, and it pointed to risks on both sides from the trade dispute with the U.S. and the energy shock.

Canadian equities advanced in the second quarter. The S&P/TSX Composite Index climbed to a record high in June, extending its gain for the year to about 10%. The energy sector was a standout early in the quarter as crude oil prices stayed elevated, and most sectors ended higher. The Materials sector was down as gold prices retreated sharply after their earlier record run. Market leadership broadened as the quarter progressed and oil prices eased.

Performance

Stock selection in industrials and utilities contributed to performance. Exposure to The Toronto-Dominion Bank (TD Bank), Royal Bank of Canada, National Bank of Canada and Aritzia Inc. contributed to performance. Both TD Bank and Royal Bank reported strong earnings results and resilient capital levels. National Bank’s stock was supported by strong financial results and a dividend increase. Aritzia posted good results and continued sales momentum.

Stock selection in materials and information technology detracted from performance, as did positioning within information technology. Lack of exposure to The Bank of Nova Scotia, overweight exposure to Alamos Gold Inc. and a holding in OR Royalties Inc. detracted from performance. Bank of Nova Scotia’s shares rose after it posted stronger earnings and raised its dividend. Both Alamos Gold and OR Royalties, saw their shares lag peers despite solid operating results.

Portfolio activity

The sub-advisor added new holding in the materials and energy sectors. TFI International Inc. was added to gain exposure to transportation and logistics. Materials exposure was increased through Teck Resources Ltd. while financials exposure was increased through Intact Financial Corp. Waste Connections Inc., Enbridge Inc. and Dollarama Inc. were increased to raise exposure to industrials, energy and consumer sectors, respectively.

Capstone Copper Corp., Boyd Group Services Inc. and CGI Inc. were sold. Artemis Gold Inc. was reduced to manage the position size with the Fund’s gold exposure.