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 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 held 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 equity markets rose in the second quarter. Developed markets gained about 13%, led by a strong rally in the U.S. Japanese equities delivered a strong return, supported by firm economic data and continuing corporate governance reforms, though a weaker yen stayed in focus for policymakers. Emerging markets outperformed, rising close to 23%, led by extraordinary gains in South Korea and Taiwan on demand tied to artificial intelligence (AI) and semiconductors, while Chinese and Indian equities lagged.

Performance

Exposure to Taiwan contributed to performance. Stock selection in communication services and underweight exposure to energy contributed to performance. Energy lagged as geopolitical risk premium in oil prices declined. Stock selection in information technology detracted.

Exposure to Texas Instruments Inc., Amphenol Corp. and Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) contributed to performance. Texas Instruments benefited from investor enthusiasm for semiconductor companies viewed as beneficiaries of AI-driven data centre spending. Amphenol saw demand for high-speed interconnect solutions used in data centres and other AI-related infrastructure. TSMC benefited from demand for leading-edge semiconductors used in AI infrastructure.

Stock selection in the U.S. detracted from performance Relative exposure to financials, consumer staples and health care also detracted. A lack of bank holdings detracted, as did overweight exposure to medical equipment in the health care sector.

Exposure to Accenture PLC, Abbott Laboratories and PepsiCo Inc. detracted from the Fund’s performance. Accenture’s shares fell after it reported soft revenue and bookings growth as investors questioned how AI may affect the company’s future revenue growth and pricing power. Abbott Laboratories shares fell after its management reduced its growth outlook. PepsiCo was affected by concerns that inflationary pressure on consumers could weigh on demand in the snacking category.

Portfolio activity

The sub-advisor added an industrials company, reflecting the view that the company’s leading market positions, sales and service advantages, and valuation offered long-term return potential. Schneider Electric SE was increased as the sub-advisor believes it may benefit from data centre construction and broader electrification through its business mix and pricing power. Holdings in information technology, industrials and materials were sold based on the sub-advisor’s lower confidence in their growth prospects or because of company-specific risks.