Q1 2026 Fund Commentary

Commentary and opinions are provided by JPMorgan Asset Management (Canada) Inc..

Market commentary

Global equity markets declined during the first quarter of 2026 as war in the Middle East disrupted energy supply, tariff uncertainty resurfaced following a legal challenge and mega-capitalization technology company stocks faced increased scrutiny during earnings season. Against this backdrop, value stocks outperformed growth stocks over the quarter.

Performance

Taiwan Semiconductor Manufacturing Co. Ltd. contributed to the Fund’s performance after reporting strong financial results that exceeded expectations, driven by robust demand for advanced node technologies and artificial intelligence (AI)-related products. An underweight position in SAP SE contributed to performance after the company released weaker-than-expected quarterly results, with investor sentiment further affected by macroeconomic uncertainty and competitive pressures. IHI Corp. contributed to performance, driven by positive trends in the company’s commercial aircraft engine business and the defence sector. The company benefited from higher aftermarket services pricing, driven by strong demand for air travel and constrained aircraft supply. Increased defence spending also supported the company’s business.

Stock selection in the information technology and materials sectors contributed to performance. On a regional basis, an underweight allocation to and stock selection in Continental Europe and an overweight allocation to emerging markets also contributed to performance.

Sony Group Corp. detracted from the Fund’s performance because of concerns about rising memory costs affecting profitability in the company’s game console business. Capgemini SE detracted from performance as the company’s shares weakened amid a broader de-rating in software and IT services because of AI disruption concerns. 3i Group PLC detracted from performance because of a slowdown in sales growth at a key asset.

Stock selection in the industrials and health care sectors detracted from performance. On a regional basis, stock selection in the U.K. and Japan also detracted from performance.

Portfolio activity

The sub-advisor added to the Fund a holding in ASICS Corp. In the sub-advisor’s view, the company has undergone a strong turnaround, driven by a disciplined category-focused strategy that has elevated brand awareness globally. The sub-advisor increased the Fund’s position in Sanrio Co. Ltd. because of the company’s strong and diversified intellectual property portfolio and untapped growth potential in the U.S. and China.

The sub-advisor sold the Fund’s holding in Diageo PLC because of mixed evidence on whether U.S. spirits consumption could fully recover its previous growth trajectory. The sub-advisor reduced the Fund’s position in Hong Kong Exchanges and Clearing Ltd. after a strong run for the company’s stock, reflecting the cyclical nature of the company’s revenue streams.

Outlook

In the sub-advisor’s view, there’s a high degree of uncertainty around how the conflict in the Middle East could evolve, though there are strong incentives for de-escalation. A continued and prolonged conflict could have a far-reaching impact on inflation, economic growth and corporate profits globally.

The sub-advisor’s research shows strong interest in AI investments from companies across many industries, though the realized benefits remain modest for now. The software sector faces considerable uncertainty, with investors considering how AI could reshape existing business models. Despite optimism for the technology, the sub-advisor is cautious on valuation levels for AI-related stocks and sees opportunities for stock selection within the sector. The sub-advisor believes that emphasizing businesses with greater control over their own trajectories may be important in the year ahead.