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

Underweight exposure to the materials sector contributed to performance, as did exposure to industrials. Stock selection in the consumer staples sector also contributed.

Lack of exposure to Wheaton Precious Metals Corp. and Barrick Mining Corp. contributed to performance. Both companies were affected by a pullback in several gold-linked equities. Overweight exposure to Sun Life Financial Inc. and a holding in Canadian National Railway Co. contributed to performance. Sun Life’s shares rose after it reported positive earnings and progress on the integration of its asset management platform. Canadian National Railway posted positive first-quarter operating and commercial performance.

Underweight exposure to the financials sector detracted from performance, as did selection in information technology and consumer discretionary.

Overweight exposure to Agnico Eagle Mines Ltd., Kinross Gold Corp. and Suncor Energy Inc. detracted from performance. Agnico Eagle and Kinross shares fell, despite solid operating results, after a rebound in gold-related stocks earlier in the year. Suncor Energy was affected by weaker investor sentiment toward energy producers. A lack of exposure to Canadian Imperial Bank of Commerce detracted as its shares rose with the broader Canadian banking sector.

Portfolio activity

The sub-advisor increased Canadian financials, including The Toronto-Dominion Bank, Royal Bank of Canada, Bank of Montreal, Sun Life Financial Inc. and Manulife Financial Corp. This increased exposure to companies that reported solid earnings and capital positions. Select industrials were increased, including Canadian National Railway Co., Canadian Pacific Kansas City Ltd. and Teck Resources Ltd.

A company in the consumer staples sector was sold. CT REIT was reduced in favour of other investments.