Q2 2026 Fund Commentary

Commentary and opinions are provided by AGF Investments Inc..

Market commentary

Global equity markets advanced during the quarter as geopolitical tensions eased. De-escalation of the conflict in the Middle East, culminating in a drafted Memorandum of Understanding, helped restore investor confidence after the disruption had curtailed supplies of oil, liquefied natural gas, fertilizer and other commodities and raised inflationary concerns.

Market leadership was concentrated in the artificial intelligence (AI) theme, with semiconductor companies rallying significantly and driving broader market performance. Data centre build-out and substantial capital expenditure commitments from major technology companies continued to support activity across the sector.

Performance

From a sector perspective, an underweight allocation to the consumer discretionary sector contributed to performance, followed by an underweight allocation to the utilities sector. Security selection in the materials and consumer staples sectors also contributed to performance. From a country perspective, exposure to South Korea contributed to performance, followed by exposure to France.

Samsung Electronics Co., Ltd., a large position in the Fund, contributed to performance. In the sub-advisor's view, the company benefited from strong AI-driven semiconductor demand, with reported first-quarter 2026 semiconductor operating income up sharply and net profit well ahead of estimates. Timken Co. also contributed to performance, supported by improved demand in industrial motion, stronger pricing, margin recovery, portfolio simplification and a management-led 80/20 transformation that, in the sub-advisor's view, could lift earnings over the medium term.

An underweight allocation to the information technology sector detracted from performance, followed by an overweight allocation to the energy sector. Security selection in the information technology and financials sectors also detracted from performance. Exposure to the U.S. detracted from performance, followed by exposure to the Netherlands.

Northrop Grumman Corp. detracted from performance. In the sub-advisor's view, the stock reversed after a strong first quarter as defence sentiment cooled when the conflict in the Middle East moved move toward resolution with the signing of the Memorandum of Understanding. Shell plc also detracted from performance as the price of oil declined on expectations that the conflict could be contained.

Portfolio activity

The sub-advisor sold Hellenic Telecommunications Organization S.A., a small holding that met the sub-advisor's price target. The sub-advisor reduced Samsung Electronics Co., Ltd. following strong performance.

Outlook

The sub-advisor remains focused on high-quality businesses whose sustainable growth potential, in the sub-advisor's view, is underappreciated by markets. Security selection emphasizes businesses with strong cash flow generation, durable competitive advantages and a demonstrated commitment to returning excess capital to shareholders. The Fund is overweight the financials, industrials and consumer staples sectors and underweight the information technology sector. In the sub-advisor's view, the opportunity set for value stocks is improving, which could prove supportive for the Fund given its value bias.

In the sub-advisor's view, underlying fundamentals suggest global economic growth could improve into the second half of the year. Industrial manufacturing has rebounded, infrastructure spending remains supportive and data centre investment continues to drive activity. In the U.S., the labour market may be softening but isn't failing, and consumer spending remains supported by the wealth effect and resilient higher-income households. Equity markets have also benefited from strong earnings, particularly in technology, AI investment and companies with durable growth drivers. After strong market returns and fuller valuations, the sub-advisor expects volatility could remain elevated. Overall, the sub-advisor's outlook remains constructive, although inflation, pressure on lower-income consumers, rising global deficits, geopolitical uncertainty and ongoing supply-chain risks remain.