Q3 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Emerging market equities edged lower in the third quarter. A sharp sell-off in technology stocks early in the quarter weighed on the asset class. Geopolitical tensions raised inflation concerns, and the U.S. Federal Reserve Board (Fed) raised interest rates in September. A stronger U.S. dollar late in the quarter added further pressure.

China’s economy grew by4.3% year-over-year in the second quarter of 2026 (as reported in the third quarter), down from 5.0% in the first quarter, as weak domestic demand offset strong exports. The People’s Bank of China held its one- and five-year loan prime rates at record lows of 3.00% and 3.50%, respectively. In late September, the U.S. and China agreed to extend their trade truce until January 2027, but not much progress on tariffs and artificial intelligence technology weighed on Chinese equities.

Latin American equities were mixed. Mexican equities dropped to a 2026 low during the quarter. Conversely, higher oil prices supported energy exporters. Brazilian equities advanced as investors grew more optimistic about the country’s fiscal outlook.

Performance

At a sector level, overweight allocation to health care, together with security selection in that sector, contributed to performance. Security selection in real estate also contributed. At a country level, security selection in Brazil and Thailand contributed to performance and partly offset weakness in other markets. The sub-advisor's stock selection model contributed to performance during the quarter. Among the model's four main factor groups, value contributed most, followed by quality. Among risk factors, the Fund's bias toward smaller companies contributed to performance.

Overweight exposures to Global Unichip Corp., WuXi AppTec Co. Ltd. and Woori Financial Group Inc. contributed to the Fund's performance because shares of each company rose during the quarter.

Security selection in the financials sector was the largest detractor from performance, though favourable currency effects partly offset that weakness. Security selection in materials and positioning in energy also detracted. At a country level, security selection in India and South Korea detracted, with currency effects adding to the weakness in South Korea. Stock-specific risk, which reflects events at individual companies rather than broad market moves, was the largest detractor during the quarter. Among the stock selection model's four main factor groups, growth detracted most.

Overweight exposures to SK Hynix Inc. and Accton Technology Corp. detracted from the Fund's performance because their shares declined. Underweight exposure to Taiwan Semiconductor Manufacturing Co. Ltd. also detracted because the company's shares advanced.

Portfolio activity

Portfolio activity in any quarter is the outcome of a disciplined process driven largely by stock selection, optimization and vetting that run daily.