Monthly commentary - Mackenzie Greenchip Team

Written by the Mackenzie Greenchip Team

Portfolio Manager Monthly Insights

Key takeaways

Greenchip strategies and environmental indexes outperformed in January.  

Greenchip benefitted from solid utility performance, led by AXIA in Brazil and by French waste/water giant Veolia, from continued strong gains in Canada-domiciled copper miners, and from f/x gains driven mainly by the Euro and the Brazilian Real.

Partially offsetting these gains were losses in ST Micro and Signify, both in response to their earnings reports from Q4 2025.

Macroeconomic recap

The wildness of 2025 got only wilder in the first month of 2026.  In geopolitics, 'peace president' Trump took gunboat diplomacy to a new level, capturing Venezuela's president, demanding possession of Greenland, blockading Cuba, seizing oil tankers, and once again threatening Iran.  He also proposed raising the 'Department of War' budget by 50% to USD $1.5 trillion.  With American 'friends' and enemies alike trying to protect against mounting risks posed by their US relations, US assets were in general sold and bilateral trade negotiations accelerated, notably between Canada and China and between Europe and India.  As 'de-dollarization' narratives grew throughout the month, commodity trading became increasingly wild with silver at one point sporting gains of more than 50% in January alone after nearly tripling in 2025. Trump's announcement of Kevin Warsh as his new nominee for chair of US Federal Reserve on the last trading day of January proved a suitable catalyst to end the short-term trading climax for commodities: silver and gold had record-setting drops, with silver down more nearly 30% (yet still up double-digits for the month).

Trading in broader markets was nowhere near as wild as in commodities, but growing cracks were evident, especially in America's technology giants as earnings reports from Tesla and Microsoft failed to impress. We expect trading volatility to increase while social and geopolitical tensions are unlikely to see relief.  Strain on trade, supply chains, and resources is likely to persist and continue to support de-dollarization and re-rating of tangible assets, as we believe new central bank leadership will not lead to substantive changes in policy.

Current positioning and Outlook

Greenchip strategies and environmental indexes outperformed in January. Greenchip benefitted from solid utility performance, led by AXIA in Brazil and by French waste/water giant Veolia, from continued strong gains in Canada-domiciled copper miners, and from f/x gains driven mainly by the Euro and the Brazilian Real.  Partially offsetting these gains were losses in ST Micro and Signify, both in response to their earnings reports from Q4 2025.  While ST Micro is finally seeing signs of cyclical bottom in its core industrials end markets, automotive channels are weaker and the company expects to incur restructuring costs throughout the year.  And Signify continues to contend with growing Chinese competition while investing heavily in market development for its high-end connected lighting offering.  We see value in both companies, especially as underappreciated investments in an elevated market that is ignoring growing systemic risks.  ST Micro stands to improve margins significantly once restructuring is complete and manufacturing shifts to larger diameter wafer fabs.  And Signify will continue to be challenged to deliver growth but pays a dividend yield of nearly 10% and generates free cash flow well in excess of the dividend, even under difficult industry conditions.

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