Q3 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The global economy continued to grow in the third quarter, although geopolitical tensions, trade disruptions and elevated inflation created uncertainty. The conflict in the Middle East flared again after a temporary peace deal between the U.S. and Iran proved short-lived, and the Strait of Hormuz stayed effectively closed. Crude oil prices climbed back above USD$100 per barrel during the quarter, and government bond yields rose to multi-year highs.

Several major central banks raised interest rates in response to rising inflation. The U.S. Federal Reserve Board raised its policy interest rate by 25 basis points in September, and the European Central Bank made its second interest rate increase of the year. The Bank of Japan raised its policy interest rate to 1.25%, its highest level since 1995. The Bank of Canada and the Bank of England held interest rates steady.

Global equity markets posted a small gain, supported by strong corporate earnings and enthusiasm around artificial intelligence. U.S. equities reached new record highs. European equities posted a small loss, while U.K. and German equities advanced. Japanese equities declined as rising bond yields and a stronger yen pulled the market back from record highs reached in June. Emerging markets equities edged lower as a sell-off in technology stocks in South Korea and Taiwan and a stronger U.S. dollar weighed on the asset class. Chinese equities declined as limited progress in trade talks with the U.S. and slowing corporate profits weighed on sentiment.

Gold prices rose over the quarter. Gold climbed to a three-month high near USD$4,700 per ounce in late August, supported by geopolitical tensions and inflation concerns, before falling sharply in September as inflation-adjusted interest rates rose and the U.S. dollar strengthened. Gold ended the quarter near USD$4,160 per ounce. Silver also fell sharply in September.

Performance

Stock selection in Canada and Australia contributed to performance. An overweight allocation to Australia also contributed.

Discovery Mining Ltd. was the largest individual contributor, helped by a positive market reaction to record second-quarter revenue and production and continued exploration success at Borden. Benz Mining Corp. also contributed, following high-grade drilling results at Icon and plans to speed up work toward a first resource estimate at Glenburgh. Rox Resources Ltd. contributed as high-grade drilling and mine development advanced at Youanmi.

The Fund invests in essentially one sector, materials, so the main detractors were specific securities within it. An underweight allocation to the U.S. detracted most from performance, reflecting the Fund's below-benchmark exposure to Newmont Corp.

Newmont was the largest individual detractor because the Fund's average position stayed well below its benchmark weight. Gladiator Metals Corp. detracted as some of its strong second-quarter gains reversed, even with continued high-grade drilling results at the Whitehorse Copper Project.

Portfolio activity

The sub-advisor repositioned the Fund during the quarter, balancing long-term opportunities with disciplined risk control. The sub-advisor added Newmont and Allied Gold Corp. The sub-advisor increased AngloGold Ashanti PLC and DPM Metals Inc., among others.

The sub-advisor sold Royal Gold Inc. and PDI Gold Ltd. The sub-advisor reduced Eldorado Gold Corp. and Alamos Gold Inc., among others.