Q2 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The U.S. economy expanded at a solid pace in the second quarter, supported by resilient consumer spending and business investment. The labour market changed little, and the unemployment rate held broadly steady. Inflation stayed well above the U.S. Federal Reserve Board’s (Fed) 2% target, partly because of higher energy costs tied to the conflict in the Middle East.

The Fed held the federal funds rate steady at a target range of 3.50%–3.75% at its June meeting, keeping its interest rate-cutting cycle on pause. Fed officials adopted a more hawkish tone, and their latest projections pointed to the possibility of interest-rate increases later in the year rather than cuts, as they focused on returning inflation to target.

U.S. small- and mid-capitalization equities gained in the second quarter but trailed the large-capitalization market, where semiconductor and artificial intelligence-related stocks drove the strongest gains. Energy and materials companies contributed as commodity prices stayed firm early in the quarter. Industrials held up, supported by domestic manufacturing investment, while consumer-oriented companies delivered mixed results.

Performance

Stock selection in the materials and energy sectors contributed to performance. Exposure to Maxlinear Inc. and ACM Research Inc. contributed to performance. Maxlinear saw growth in its infrastructure business and benefited from higher expectations for its artificial intelligence-related connectivity opportunity. ACM Research reported revenue and shipment growth based on momentum from new semiconductor equipment products.

Selection within the health care and industrials sectors detracted from performance. The Fund’s underweight exposure to Sandisk Corp. and its holding in Verra Mobility Corp. detracted from performance. Sandisk shares rose because of its shift toward higher-value data centre customers, pricing and multi-year customer agreements. Verra Mobility was affected by Avis Budget Group’s ending of a significant toll-management contract.

Portfolio activity

The sub-advisor added Sandisk Corp. and LifeStance Health Group Inc. to the Fund. Bloom Energy Corp., Credo Technology Group Holding Ltd. and StoneCo Ltd. were increased. Neogen Corp. and HealthEquity Inc. were sold, while Cirrus Logic Inc. and Verra Mobility Corp. were reduced.