Monthly commentary - Mackenzie Betterworld Team

Key takeaways

Equities continue to record a third month of declines in October as rising bond yields stoke investor fears. Broad indices finished in negative territories for the month. The S&P/TSX declined 3.2%, S&P500 slid another 2.2%, while the MSCI World dipped just 0.3% in Canadian dollar terms. Rising bond yields continued to dominate investor worries as the US 10-year treasury yield peaked just shy of 5%.

The third quarter earnings season passed the halfway mark and results have been reporting better than expected with aggregate earning ahead by 1.3% at the end of October. Overall, the bigger earnings beats seem to be coming from the Financials, Energy and Technology sectors while Healthcare, Utilities and Real Estate have generally not been meeting earnings estimates so far.

Worries/what keeps us up at night?

The renewable energy and clean technology areas of the market have been significantly impacted by the high interest rate environment and the recent surge in bond yields. The long-term case for growth in renewables remains attractive, in our view. The necessary demand to achieve net-zero emissions by 2050 has not changed. With government bonds generally considered as a risk-free asset, rising bond yields reduce the perceived attractiveness of short term returns for renewable power producer who have locked in long term power purchase agreements. Why purchase a risky asset when you can lock in a risk-free return? Positioning in renewable power companies for the eventual normalization in rates has us contemplating the questions of how much and when to emphasize this area of our portfolio to capture the recovery.


From the summer highs at the end of July, US markets have now pulled back 9%. We think that this reset creates some breathing room for equities. If we see bond yields normalizing and an increasing level of confidence in the central banks having completed their rate increases, we see a case where the environment improves for companies with solid fundamentals who were caught up in the broad-based pull back.

Sustainability Update

This year’s annual committee of parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) – referred to as COP28 – is scheduled to begin on November 30, 2023 in Dubai. The two week conference is still viewed as the pinnacle of executive-level global climate discussions, and as the forum for discussing the implementation of the 2015 Paris Agreement.

A lot has occurred since the 2022 COP held in Sharm El Sheikh, Egypt: war, inflation, and fractured global supply chains add new pressures on a system which already required delicate diplomacy, and trillions of dollars in funding.

The questions we hope to gain a better understanding from COP28 are:

Will meaningful progress be made towards decarbonization?

Will a loss and damage fund come to fruition?

Will steps be taken to reduce global methane emissions?

Proxy Voting

In October, the Betterworld team participated via proxy in 1 company meetings.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

The contents of this document (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) are not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

This document may contain forward-looking information which reflect our or third party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of October 31, 2023. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. Mackenzie Investments, which earns fees when clients select its products and services, is not offering impartial advice in a fiduciary capacity in providing this sales and marketing material. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change.