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

Underweight exposure to the materials and energy sectors contributed to performance, as did stock selection in the U.S. Lack of exposure to Wheaton Precious Metals Corp. and Barrick Mining Corp. contributed to performance. Both companies were affected by a pullback in several gold-linked equities. Overweight exposure to Sun Life Financial Inc. contributed to performance after its shares rose. Sun Life is a diversified insurance and wealth-management company whose businesses include insurance, asset management and retirement solutions in Canada and international markets.

Stock selection in Canada detracted from performance, as did selection in energy and information technology. Underweight exposure to financials also detracted. Overweight exposure to gold producers Agnico Eagle Mines Ltd. and Kinross Gold Corp. detracted from performance as their shares fell. A lack of exposure to Canadian Imperial Bank of Commerce detracted as its shares rose with the broader Canadian banking sector.

Portfolio activity

The sub-advisor increased Dollarama Inc., Intact Financial Corp., Agnico Eagle Mines Ltd. and Kinross Gold Corp. A company in the consumer staples sector was sold. CT REIT, Bombardier Inc., Canadian Tire Corp. Ltd., iA Financial Corp. Inc., Suncor Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd. were reduced.