Q1 2026 Fund Commentary

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

Market commentary

U.S. equities declined during the first quarter of 2026 as markets navigated a challenging landscape marked by heightened geopolitical tensions, renewed tariff uncertainty and sharp moves in energy markets. The quarter began with mega-capitalization technology company stocks under scrutiny following fourth-quarter 2025 earnings, contributing to a rotation in leadership that favoured value over growth. Investor sentiment shifted as markets reconsidered the concentration of returns in large technology companies, particularly those exposed to artificial intelligence spending.

Investor sentiment was further unsettled by a legal ruling that led to the implementation of a flat tariff on all imports. The outbreak of conflict in the Middle East disrupted oil and gas supply, fuelling inflation concerns and weighing on risk appetite across markets. Energy prices surged sharply in March, contributing to wider credit spreads and weighing on consumer-facing and transportation sectors. The U.S. Federal Reserve Board paused its monetary easing cycle during the quarter, emphasizing caution amid mixed labour market signals and elevated inflation.

Within this environment, energy, utilities and materials were the strongest-performing sectors, benefiting from rising commodity prices and defensive characteristics. Information technology, consumer discretionary and financials sector lagged because of falling valuations, rising costs and profit-taking. Small-capitalization stocks outperformed large-capitalization stocks, and value stocks led growth stocks over the quarter. The rotation toward value was broad-based, with equal-weighted measures outperforming market-capitalization-weighted measures.

Performance

Holdings in Applied Materials Inc., AppLovin Corp. and KLA Corp. contributed to the Fund’s performance.

An overweight allocation to the utilities sector and underweight allocations to the industrials and financials sectors also contributed to performance.

Holdings in Micron Technology Inc., SanDisk Corp. and Intel Corp. detracted from the Fund’s performance.

Stock selection in the technology, industrials and energy sectors also detracted from performance.

Portfolio activity

The sub-advisor made a series of small adjustments to individual positions over the quarter, seeking to align the Fund’s characteristics with its benchmark while also seeking to provide a reduction in carbon intensity. No new top holdings were added, and no top holdings were fully sold during the quarter. The Fund’s investment approach continues to focus on providing market-like returns while achieving a lower carbon footprint relative to the broader market.

Outlook

There haven’t been any changes to the strategic position of the Fund. The Fund continues to seek to provide a reduction in carbon intensity compared to its benchmark. The sub-advisor’s approach remains focused on constructing a diversified portfolio that balances financial returns with carbon transition objectives, making incremental adjustments as market conditions and company-level carbon data evolve.