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 industrials and utilities sectors contributed to performance, as did overweight exposure to industrials.

Overweight exposure to The Toronto-Dominion Bank (TD Bank) and Royal Bank of Canada contributed to performance, as did exposure to National Bank of Canada. TD Bank and Royal Bank reported higher earnings and lower provisions for credit losses. National Bank benefited from earnings growth and an increase in its dividend.

Stock selection in the materials and information technology sectors detracted from performance. Underweight exposure to information technology also detracted.

A lack of exposure to The Bank of Nova Scotia detracted from performance as bank shares rose. Overweight exposure to gold-related equities Alamos Gold Inc. and OR Royalties Inc. detracted from performance. Alamos Gold shares fell after it lowered its production forecast and posted higher costs following operational challenges at Young-Davidson. OR Royalties was affected by a stronger U.S. dollar and expectations for U.S. interest rate increases, which put pressure on gold-related equities.

Portfolio activity

The sub-advisor added TFI International Inc. to the Fund. Enbridge Inc., Royal Bank and TD Bank were increased. Two holdings in materials and one in communication services were sold. Artemis Gold Inc. was reduced.