iProfile™ Private Discretionary Portfolio – Global Mid-Neutral Balanced
Portfolio commentary Q4 2024
Highlights
① The portfolio rose over the period as all component iProfile pools, except the international equity pool, were higher, led by the iProfile U.S. Equity Private Pool.
② North American equities finished the year strongly on the back of post-election optimism.
③ A continued easing of monetary policy helped boost performance.
Portfolio returns: Q4 2024
| Total Return | 1M | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inc. (March 15, 2021) |
iProfile Private Discretionary – Global Mid-Neutral Balanced Series I | -0.39
| 1.97
| 13.14
| 13.14
| 4.53
| 5.62
|
Portfolio overview
The iProfile™ Discretionary Portfolio – Global Mid-Neutral Balanced rose over the period (+1.8%). The portfolio benefited most from gains in North American equities as central banks continued to cut benchmark interest rates and economic data suggested growth in the U.S. was solid, if not accelerating. The iProfile U.S. Equity Private Pool (+8.5%) was the strongest component pool, while the iProfile International Equity Private Pool was the only constituent pool to lose ground (-1.6%). A significant weakening of the Canadian dollar versus the U.S. dollar over the period added to gains for Canadian investors from international portions of the portfolio.
The iProfile U.S. Equity Private Pool comprises only 10% of the portfolio and yet accounted for about 40% of the portfolio’s total return in the period. The S&P 500 Index climbed to record levels in the quarter, with the U.S. presidential election and two U.S. Federal Reserve (the Fed) interest rate cuts each adding only brief bouts of volatility to an otherwise steady trek higher for stocks. The pool underperformed the S&P 500 Index Total Return $ CAD (+9.1%) but outperformed its U.S. equity peer group median, as all constituent mandates within the pool gained ground. Gains were led by the pool’s two large-cap growth-oriented segments, managed by Putnam Investments and American Century Investments.
The iProfile Canadian Equity Private Pool (+3.3%) was a significant contributor as the Canadian benchmark index also touched a record high in the period. The pool lagged the S&P/TSX Composite Index Total Return (+3.8%) but, similar to the U.S. pool above, slightly outperformed its Canadian equity peer group average as all constituent mandates within the pool advanced, led by the Fidelity Investments-managed core segment. Other pools with significant North American (especially U.S.) equity exposure were among top contributors, including the iProfile ETF Private Pool (+4.8%) and the iProfile Low Volatility Private Pool (+3.1%). The iProfile International Equity Private Pool was the only pool to fall, with seven of the eight pool segments declining. However, it outperformed the MSCI EAFE Index Total Return (Net) $ CAD, mainly due to a gain from the value-oriented segment managed by Mackenzie Investments Global Quantitative Equity Team.
The iProfile Fixed Income Private Pool (+0.24%) is the largest component iProfile pool in the portfolio and therefore contributed positively to total returns despite its modest advance. Boosted by gains in its high-yield bond, short-term bond and real property segments, the pool outperformed its global fixed-income peer group, even as two of the three largest pool components (global bonds and multi-strategy fixed income) lost ground.
Market overview: the U.S. dollar and equities dominated the quarter
Investor sentiment turned optimistic in the fourth quarter of 2024, as equities rallied to close the year on a high note. Three defining themes shaped the quarter: a historic U.S. presidential election, ongoing central bank rate cuts and a rise in political risks both domestically and abroad. Collectively, these factors drove market movements, creating an optimistic and rewarding environment for investors following the decisive U.S. election.
Global central banks continued to ease their monetary policies, shifting the focus from combating inflation to supporting economic growth and labour market stability. The Bank of Canada (BoC) cut its overnight rate twice by 50 basis points (half a percentage point) each time, for a total reduction of one percentage point during the quarter, bringing the overnight rate to its lowest level in over two years. Similarly, the U.S. Federal Reserve followed its September cut with two consecutive reductions of one-quarter percentage point each.
Market outlook: global economies are set up for growth into 2025
Our outlook for 2025 is optimistic. With inflation no longer a major concern, central banks can continue their supportive policies. Although political risks remain, the global economic environment seems favourable, and corporate earnings are projected to improve. The historically strong performance in the fourth quarter for sectors like consumer discretionary and financials underscored a solid foundation as we enter the new year.
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