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 materials and energy contributed to performance, as did selection within Canada.

Overweight exposure to Royal Bank of Canada and Manulife Financial Corp. contributed to performance. Royal Bank posted growth in net income and earnings per share, with higher results across all business lines. Manulife reported double-digit growth in core earnings per share and new business contractual service margins. A holding in iShares Semiconductor ETF contributed to performance, benefiting from a rebound in semiconductor shares amid artificial intelligence enthusiasm.

Selection in information technology and consumer discretionary detracted from performance. Exposure and stock selectin in the U.S. detracted from performance.

Overweight exposure to Agnico Eagle Mines Ltd. and Canadian Natural Resources Ltd. detracted from performance. Agnico Eagle was affected by a pullback in gold prices and strengthening U.S. dollar. Canadian Natural Resources shares fell along with crude prices, which fell sharply from April highs after conflict in the Middle East de-escalated and expected supply disruptions eased. TELUS Corp. also detracted from performance because of lower mobile phone average revenue per user, lower business-to-business data services revenue, and lower voice revenue.

Portfolio activity

The sub-advisor added South Bow Corp. and Morgan Stanley to the Fund. Dollarama Inc., Canadian Pacific Kansas City Ltd., The Toronto-Dominion Bank, Nasdaq Inc. and Brookfield Asset Management Ltd. were increased. Keyera Corp., iShares Semiconductor ETF and Microsoft Corp. exposures were increased.