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 Brookfield Corp., Finning International Inc. and Manulife Financial Corp. contributed to the Fund’s performance. Brookfield’s shares fell as investors grew more cautious about private credit risk, which is a key driver of the company’s growth. The Fund’s underweight exposure to Brookfield contributed to performance. Finning International reported strength in its South American operations, new demand for power generation and a positive outlook for Canadian infrastructure projects. Manulife Financial benefited from strength in its wealth businesses and growth in Asian operations.

Underweight exposure to Barrick Mining Corp. and overweight exposures to Northland Power Inc. and Agnico Eagle Mines Ltd. detracted from the Fund’s performance. Barrick Mining stock rose after its Chief Executive Officer left the company and its board shifted its tone around stock buybacks. Northland Power shares fell after the company announced an unexpected dividend cut that was prompted by weather-related challenges and a weaker free cash flow outlook. Agnico Eagle Mines shares underperformed other gold stocks during the period.

At a sector level, underweight exposure to the information technology and real estate sectors contributed to the Fund’s performance. Stock selection in the industrials, information technology and financials sectors contributed to performance. Selection in the materials, utilities and energy sectors detracted from the Fund’s performance.

Portfolio activity

A holding in Canadian Imperial Bank of Commerce was added to the Fund on the sub-advisor’s belief that the bank has superior return on equity and growth prospects relative to peers.

A holding in Chartwell Retirement Residences was increased as, in the sub-advisor’s view, the company’s properties are well suited to serve Canada’s growing and aging seniors population. A holding in Capital Power Corp. was increased based on the company’s potential to benefit from rising power demand from data centre buildouts. A holding in Cenovus Energy Inc. was increased after the company acquired MEG Energy Corp. and sold some of its U.S. refineries. A holding in Manulife Financial was increased because of its improved valuation. A holding in Gildan Activewear Inc. was increased based on the sub-advisor’s positive view about the company’s future apparel sales and higher earnings from its Hanesbrands Inc. acquisition.

Fund holdings in Sun Life Financial Inc. and Definity Financial Corp. were sold. The sub-advisor had concerns about Sun Life Financial’s growth prospects and believed Definity Financial’s shares were fully valued. The Fund’s bank exposure was reduced. Within energy, holdings in TC Energy Corp. and Enbridge Inc. were reduced after strong share price performance.