Q1 2026 Fund Commentary

Commentary and opinions are provided by JPMorgan Asset Management (Canada) Inc..

Market commentary

Global equity markets declined during the first quarter of 2026 as war in the Middle East disrupted energy supply, tariff uncertainty resurfaced following a legal challenge and mega-capitalization technology stocks faced increased scrutiny during earnings season. Energy prices surged, contributing to broader inflation concerns and weighing on investor sentiment. Against this backdrop, value stocks outperformed growth stocks over the quarter, and defensive sectors attracted increased interest from investors.

Performance

Shell PLC contributed to the Fund’s performance. Despite reporting damage to a facility in the Middle East because of the conflict in the region, the rise in energy prices drove strong results. TotalEnergies SE contributed to performance after reporting solid financial results, including strong refining margins and increased production from new projects. An underweight position in SAP SE contributed to performance after the company released weaker-than-expected quarterly results, with investor sentiment further affected by macroeconomic uncertainty and competitive pressures.

Stock selection in the communication services and information technology sectors contributed to performance. On a regional basis, stock selection in Continental Europe and an overweight allocation to emerging markets also contributed to performance.

Sony Group Corp. detracted from the Fund’s performance because of concerns about rising memory costs affecting profitability in the company’s game console business, despite stronger-than-expected performance of third-party titles. Capgemini SE detracted from performance as the company’s shares weakened amid a broader de-rating in the software and IT services sector because of artificial intelligence disruption concerns that drove rotation out of the sector. 3i Group PLC detracted from performance because of a slowdown in sales growth at a key asset.

Stock selection in the industrials sector and an overweight allocation to the consumer discretionary sector detracted from performance. On a regional basis, stock selection in Japan and Continental Europe also detracted from performance.

Portfolio activity

The sub-advisor added to the Fund a holding in ASICS Corp. In the sub-advisor’s view, the company has undergone a strong turnaround, driven by a disciplined strategy centred on running and sports shoes, which has successfully elevated brand awareness globally.

The sub-advisor increased the Fund’s position in BAE Systems PLC because of the company’s strong earnings growth trajectory, supported by a large order backlog and durable growth visibility that the sub-advisor believes the market still underappreciates relative to peers.

The sub-advisor sold the Fund’s holding in Diageo PLC because of mixed evidence on whether U.S. spirits consumption could fully recover its previous growth trajectory, with the current inventory cycle potentially taking several years to clear.

The sub-advisor reduced the Fund’s position in Hong Kong Exchanges and Clearing Ltd. because of the cyclical nature of the company’s revenue streams and its dependence on the direction of the Chinese equity market.

Outlook

In the sub-advisor’s view, there’s a high degree of uncertainty around how the conflict in the Middle East could evolve, though there are strong incentives for de-escalation. A continued and prolonged conflict could have a far-reaching impact on inflation, economic growth and corporate profits globally. The sub-advisor is watching developments closely.

The sub-advisor believes the macroeconomic picture is expected to be uncertain and volatile in 2026, but this environment may open opportunities for long-term investors. The sub-advisor has been identifying companies where share prices have become detached from long-term fundamentals. The sub-advisor believes that emphasizing businesses with greater control over their own trajectories may be important in the year ahead.