Q1 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The global economy navigated a turbulent first quarter. Markets began 2026 on a positive note, with continued disinflation and expectations for further monetary easing supporting investor confidence. The outlook shifted dramatically in late February after the conflict in the Middle East escalated and the Strait of Hormuz was closed in early March, disrupting a significant share of global oil supply and triggering widespread concern about an energy-driven inflation shock.

Major central banks responded cautiously. The U.S. Federal Reserve Board and the Bank of Canada both held rates unchanged at their January and March meetings. The European Central Bank postponed planned rate reductions after energy prices surged, raising its inflation forecasts and reducing its growth projections.

Global fixed income markets delivered mixed results in the first quarter as rising energy prices disrupted the easing narrative that had supported bonds through 2025. Government bond yields rose in many developed markets, putting downward pressure on prices. Investment-grade corporate bonds showed greater resilience, particularly in the energy sector, while high-yield bonds were mixed as investor risk appetite declined toward quarter-end.

Global equity markets declined in the first quarter, with the MSCI World Index falling about 3.5%. The U.S. market weighed most heavily on results as large-cap technology stocks retreated amid rising inflation concerns. Japanese equities benefited from ongoing corporate governance reforms. Emerging markets ended the quarter roughly flat, as higher import costs in oil-importing economies in Asia partly offset gains in commodity-exporting markets.

Performance

At a sector level, an overweight allocation to the materials sector contributed to the Fund’s performance. Stock selection within the information technology sector also contributed to performance.

Linde PLC contributed to performance. Investors continued to reward the company’s defensive, high-visibility earnings model that is well positioned for an industrial recovery as volumes improve. Keysight Technologies Inc. contributed to performance on the back of a strong fiscal first quarter, with record revenue, double-digit growth across segments and results above expectations. These results supported the view that demand was recovering in the company’s core end markets.

An underweight allocation to the energy sector detracted from the Fund’s performance.

SAP SE detracted from performance after its 2026 outlook implied a slowdown in cloud growth and cloud backlog momentum. This reinforced broader market concerns that artificial intelligence could compress traditional software economics. Boston Scientific Corp. detracted from performance because of a revenue miss in the company’s U.S. Electrophysiology segment. The miss was driven by slowing market growth and intensifying competition in the pulsed field ablation space.

Portfolio activity

The sub-advisor reduced holdings within the consumer discretionary sector because of opportunities identified in other areas of the market.