Q4 2025 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Canada’s economy showed signs of strain in the fourth quarter as U.S. tariffs and weakening trade flows continued to pressure manufacturing and export?oriented sectors. Business confidence softened, and labour?market momentum faded, although household spending remained stable heading into year?end.

The Bank of Canada held its policy rate at 2.25% in December following its 25-basis-point rate cut in October, citing moderating inflation and persistent economic uncertainty. Canada’s unemployment rate rose to 6.8% in December, as labour?force growth outpaced hiring and trade?sensitive industries showed renewed weakness.

The Canadian equity market advanced in the quarter, with the S&P/TSX Composite Index rising about 6.3%, supported by strength in the materials and consumer discretionary sectors. Information technology also contributed, while energy lagged broader market gains amid softer crude oil prices through year?end.

Performance

Relative exposures to Kinross Gold Corp., CCL Industries Inc. and Constellation Software Inc. contributed to the Fund’s performance. Kinross Gold benefited from a 12% increase in the price of gold, cost discipline and production consistency. Shares of CCL Industries rose because of improvement across the company’s core businesses, with more stable volumes in key segments. No exposure to Constellation Software was a contributor to performance as the company’s shares fell amid investor concerns about the potential impact of artificial intelligence on the business.

Relative exposures to Barrick Mining Corp., Allied Properties REIT and Northland Power Inc. detracted from the Fund’s performance. Underweight exposure to Barrick Mining detracted from performance. The company’s stock rose as the price of gold rose, and the company benefited from discussions around simplifying its portfolio. Allied Properties REIT was affected by the slow recovery in the office sector following the COVID-19 pandemic. The company’s stock fell after the company made a 60% cut to its monthly distribution. Northland Power cut its distribution despite reassurances from a new management team that a cut had not been under consideration.

At a sector level, stock selection in the industrials, health care and energy sectors contributed to the Fund’s performance. Underweight exposure to the energy sector and overweight exposure to the consumer discretionary sector also contributed to performance. Underweight exposure and stock selection in the materials sector detracted from performance, as did selection in the utilities, financials and real estate sectors.

Portfolio activity

The sub-advisor increased the Fund’s holding in Waste Connections Inc. and reduced the Fund’s holding in Bank of Montreal. These transactions were based on the stocks’ individual risk/reward profile.