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

Stock selection in the materials and energy sectors contributed to performance. Underweight exposure to materials also contributed to performance.

Overweight exposure to Power Corp. of Canada and Manulife Financial Corp. contributed to the Fund’s performance. Power Corp.’s stock was supported by the earnings results of its underlying companies and capital returns to shareholders. Manulife reported higher earnings and growth in new business metrics. Lack of exposure to Kinross Gold Corp. and Franco-Nevada Corp. contributed to performance as investors were negative toward gold equities.

Underweight exposure and stock selection in information technology detracted from performance, as did selection within consumer discretionary.

Overweight exposure to Agnico Eagle Mines Ltd. and TELUS Corp. detracted from performance. Agnico Eagle was affected by a pullback in gold equities amid gold price volatility and higher interest rate expectations. TELUS felt the impact of competitive pricing, higher capital intensity and interest rates. Canadian Natural Resources Ltd. detracted from performance as crude oil prices fell from their April highs. Energy equities were pressured by rising commodity price volatility.

Portfolio activity

The sub-advisor added several new positions including South Bow Corp. and Jabil Inc.

Dollarama Inc. was increased based on store sales growth and its defensive earnings characteristics. Canadian Pacific Kansas City Ltd. was increased because of the sub-advisor’s positive view of its long-term network advantages, operating efficiency and cross-border growth opportunities. Keyera Corp. was increased after the close of its acquisition of Plains All American Pipeline LP’s Canadian natural gas liquids business. In the sub-advisor’s view, the acquisition should be supportive of the company’s integrated midstream platform. Other increases were in Brookfield Asset Management Ltd. and CGI Inc. Select holdings in health care, consumer staples and financials were sold in favour of other investments. To fund new purchases and manage sector exposures, the sub-advisor reduced Agnico Eagle Mines Ltd. and Teck Resources Ltd. Canadian Natural Resources Ltd., Cenovus Energy Inc., TC Energy Corp. and Enbridge Inc. were reduced amid rising commodity price volatility. The sub-advisor reduced smaller U.S. and global holdings, including Exxon Mobil Corp., TotalEnergies SE and Brookfield Infrastructure Partners LP.