Q2 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The global economy steadied in the second quarter after the energy shock that dominated the start of the year. Crude oil prices stayed high through much of the quarter before retreating late in the period as tensions in the Middle East eased and shipping through the Strait of Hormuz began to resume. The pullback in oil lowered input costs for energy-importing economies and helped cool fears of a broader inflation shock.

Major central banks stayed cautious. The U.S. Federal Reserve Board (Fed) and the Bank of Canada both kept interest rates unchanged, and the Fed signaled that rate increases were possible later in the year. The European Central Bank raised its policy interest rates at its June meeting in response to rising inflationary pressures.

Global fixed income markets delivered mixed results in the second quarter. Government bond yields rose in the U.S. as the market priced in the possibility of Fed rate increases, putting downward pressure on bond prices, while Canadian yields eased late in the quarter on contained inflation. Investment-grade corporate bonds showed greater resilience, with energy-sector issuers benefiting from firm oil prices early in the period. High-yield bonds were mixed. Emerging market bonds in oil-importing economies improved as crude prices retreated late in the quarter.

Performance

A term loan issued by MH Sub I LLC (2031/12/31) contributed to the Fund’s performance through floating rate income and improved market confidence. Recurring digital health and professional services revenues supported the credit, although higher debt remained a risk.

A term loan issued by Jadex Inc. (2028/02/18) detracted from performance. Weaker demand, higher operating costs and cash-flow deficits increased refinancing concerns ahead of 2028. The first-lien security offers some recovery protection, but deteriorating credit metrics and reduced liquidity pressured valuation.

Portfolio activity

The sub-advisor added a term loan issued by Discovery Global Holdings Inc. (2033/06/04) for its secured, floating rate income with strong collateral coverage. The refinancing extended maturities and reduced near-term bridge loan risk, although the proposed Paramount transaction introduces debt and integration uncertainty. Northleaf Private Credit III LP was increased to broaden exposure to diversified middle-market direct lending and specialty finance.

A term loan issued by Vector WP Midco Inc. (2028/10/12) was eliminated as weak lumber demand pressured revenue, profitability and cash generation. A term loan issued by Discovery Purchaser Corp. (2029/10/04) was reduced to manage single-holding and refinancing exposure as the loan moved closer to maturity.