Q1 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The global economy navigated a turbulent first quarter. Markets began 2026 on a positive note, with continued disinflation and expectations for further monetary easing supporting investor confidence. The outlook shifted dramatically in late February after the conflict in the Middle East escalated and the Strait of Hormuz was closed in early March, disrupting a significant share of global oil supply and triggering widespread concern about an energy-driven inflation shock.

Major central banks responded cautiously. The U.S. Federal Reserve Board and the Bank of Canada both held rates unchanged at their January and March meetings. The European Central Bank postponed planned rate reductions after energy prices surged, raising its inflation forecasts and reducing its growth projections.

Global fixed income markets delivered mixed results in the first quarter as rising energy prices disrupted the easing narrative that had supported bonds through 2025. Government bond yields rose in many developed markets, putting downward pressure on prices. Investment-grade corporate bonds showed greater resilience, particularly in the energy sector, while high-yield bonds were mixed as investor risk appetite declined toward quarter-end.

Global equity markets declined in the first quarter, with the MSCI World Index falling about 3.5%. The U.S. market weighed most heavily on results as large-cap technology stocks retreated amid rising inflation concerns. Japanese equities benefited from ongoing corporate governance reforms. Emerging markets ended the quarter roughly flat, as higher import costs in oil-importing economies in Asia partly offset gains in commodity-exporting markets.

Performance

From an equity perspective, stock selection in the health care sector contributed to the Fund’s performance, as did overweight allocations to the energy and consumer staples sectors. Stock selection in the U.S. also contributed. From a fixed income perspective, the Fund’s longer duration in government bonds contributed to performance as declining interest rates during the period supported bond prices.

Johnson & Johnson, Taiwan Semiconductor Manufacturing Co. Ltd. and CME Group Inc. were among the largest individual contributors to performance.

From an equity sector perspective, stock selection and a slight overweight in the industrials sector detracted from performance. Stock selection in the Netherlands and an underweight allocation to Canada also detracted. From a fixed income perspective, holdings in securitized corporate bonds detracted from performance.

Overweight allocations to SAP SE, CRH PLC and S&P Global Inc. were the largest individual detractors from performance.

Portfolio activity

The sub-advisor increased TotalEnergies SE and Exxon Mobil Corp. based on their relative attractiveness compared to other opportunities. The sub-advisor reduced Microsoft Corp. and Amazon.com Inc. in favour of other opportunities within the Fund.