Monthly commentary - Mackenzie Ivy Team

Portfolio Manager Monthly Insights

James Morrison, MBA, CFA
Vice President, Portfolio Manager
Mackenzie Ivy Canadian Fund

Markets breaching new highs in the midst of a trade war

The market narrative of 2025 has been dominated by the rapidly evolving trade war. From their April lows, markets have rallied sharply to new highs as tensions appear to have moderated and the so-called “TACO trade” rules the day. But while the backdrop has improved from the trough, it’s important to remember that the effective U.S. tariff rate is now meaningfully higher than it was at the start of the year. In other words, markets are now higher than they were before the trade war even began. This upward shift in tariff rates may prove structural, especially in light of persistent U.S. deficits. Its ripple effects could be far-reaching. That markets are breaching new highs in the midst of a trade war is a signal to stay vigilant and calls for a thoughtful, risk-aware approach. That’s exactly what Ivy is built to deliver.

Ivy Canadian continues to be a beacon of stability in a volatile world. Year to date, it has dampened downside volatility while prudently participating in the rebound. This combination of outperformance and lower volatility helps our clients stay invested and plan with confidence. Strong outcomes start with staying the course.

A key ingredient to our consistent record in volatile markets is our long-term focus. We don't rely on predicting the outcomes of near-term events. Instead, we subscribe to the philosophical tenets that quality compounds, valuation matters, and behaviour drives outcomes. That’s why we invest in businesses we understand well and apply a long-term mindset to valuation. In periods of volatility, this allows us to maintain conviction and act decisively. Whether it’s adding to Brookfield on short-term pessimism around monetizations or increasing our stake in CGI amid overstated concerns about DOGE (Department of Government Efficiency) cuts to IT spending, we stay grounded in long-term return potential. In fact, some of our top performers this year have come from areas where the macro backdrop appeared unsupportive, but company-specific fundamentals prevailed.

Take Aritzia, up more than 20% year to date and ~90% from its 52-week lows. Despite a challenging consumer environment and tariff concerns, the company delivered 31% revenue growth and margin expansion, driven by strong U.S. brand momentum. While many in retail retrenched, Aritzia gained share. Its capital-light expansion model, disciplined execution, and underappreciated brand equity position it well for long-term value creation. Through our independent research and discussions with management, we have confidence in the team’s ability to navigate the evolving tariff landscape while continuing to grow sales and improve margins. We believe the next leg of value will come from scale efficiencies and deeper U.S. monetization.

TD Bank has also contributed meaningfully, with a total return of 29% year to date versus the Canadian bank index’s 8%. At a time when most banks were priced for optimism despite macro risks, we were net sellers across the sector—with one exception. TD stood out as a business with strong fundamentals, trading at a significant discount and offering identifiable self-help levers. While sentiment was weighed down by AML fines and a U.S. asset cap, we increased our position with the conviction that these issues had obscured the company’s core strengths. In our view, the long-term quality of the franchise, particularly under new leadership, would come back into focus over time. That thesis is playing out.

Neither investment was based on a macro call. In fact, the prevailing backdrop argued against them. But our long-term perspective, combined with valuation discipline and a focus on business quality, allowed us to lean into opportunities mispriced in the moment.

Wherever trade negotiations ultimately land, our discipline doesn’t change. Ivy Canadian invests in resilient businesses at reasonable valuations—companies whose success depends on execution, not economic tailwinds. We diversify not just by geography or sector, but by risk factor. That consistency is built for more than one market regime.

The market may be rebounding at the moment, but our focus is on building portfolios that don’t need a rebound to succeed.

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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 June 17, 2025. 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.

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