Quarterly commentary - Mackenzie Resource Team

Global Resource Fund - Portfolio Insights

• An unfavorable supply/demand situation in the oil markets started to generally improve by late-2025 with the acceleration of the global economy and demand for oil. A portfolio rebalancing process to reduce the Fund’s underweight position in oil was well underway when the Iran conflict hit by late-February.
• High oil, refined products, and international gas prices —largely driven by the Iran conflict — supported strong performance across the sector in the Q1. Strong performance by Saturn Oil and Gas (+158% during the quarter) contributed to performance, as it benefited from rapid balance sheet improvement, as well as SM Energy (+59%), which integrated recently acquired assets, reset production levels and improved its balance sheet.
• Strong prior performance by metals and mining equities such as Capstone Copper (-24%) and Rio2 (-20%) reversed abruptly upon the onset of the Iran conflict. Conversely, several commodity markets have seen sharp price increases due to disruptions, benefiting methanol producer Methanex (+53%), and Brazilian aluminum producer Companhia Brasileira de Alumínio (+51%).
• During the quarter, we repositioned a portion of our exposure in gold and copper toward energy. Notable portfolio actions included increasing our position in oil & gas producer Ovintiv, and initiating a new position in SM Energy, while reducing exposure to Lundin Gold and Barrick Gold.

Precious Metals Fund - Portfolio Insights

• Precious metals equities that experienced big re-ratings during 2025, such as Rio2 (-20% during the quarter) checked back as gold and gold equities experienced some liquidation as the Iran conflict unfolded.
• The portfolio managers continue to find good opportunities in exploration and development companies such Arizonan Sonoran (+46%), which received a takeover offer, and Belo Sun Mining (+164%), which which received its gold mine construction permit in Brazil.
• Eldorado Gold (-3%) detracted, as it announced an ill-timed and off-strategy takeover bid for copper/zinc/gold developer Foran Mining.
• Agnico Eagle Mines provides continued cost and strategic discipline; its weighting was increased in the portfolio.
• Profits were taken in silver bullion and silver equity exposures as silver prices reached a cyclical high relative to gold.

Macro Views

• The global economy showed early signs of reacceleration late 2025 and early-2026, following a sustained round of global rate cuts, the rollout of massive fiscal stimulus programs in the US/Europe/China, and encouraging early signs of anti-involution measures in China. Positive economic momentum was seen in emerging market outperformance, improving oil demand and a significant pick up in construction activity. Would the Iran conflict resolve expediently, global growth’s momentum will likely carry through for the rest of 2026 and even extend into 2027. This should bode well for cyclical sectors such as Materials and Energy, relative to Gold, which was the impetus for the Fund’s positioning changes during Q4 2025 and Q1 2026.
• The Iran crisis reinforces a shift that began around 2020. A series of globally significant events: supply chain disruptions tied to environmental issues, COVID-19, the Russia–Ukraine war, tariffs, and rising U.S.–China tensions; are all driving the world toward a multipolar order and emphasize the need for re-industrialization.
• Even if a swift resolution is found for the Iran conflict and trade through the Strait of Hormuz were to resume quickly, several commodity markets have already structurally changed. Oil is anticipated to stay higher for longer as global inventories have been drawn and a risk premium will linger. Basic chemicals and aluminum markets should remain tighter due to structural damage to producing facilities in the Middle East, which make up some 10 to 40% of global exports in various commodities.  The world will now price in secure and preferred supplies at a premium.  Inflation will likely remain elevated, with rising commodity prices both a source of inflation, and a possible solution to protect investor portfolios against the negative effects of inflation on long-dated bonds and growth equities.
• The significance of the Strait of Hormuz to the physical supply of critical materials to the world economy (especially to Europe and Asia) cannot be understated. Should the blockade extend for several months, we believe that many value chains globally come to a standstill. Economic downturn risks are therefore elevated and are reflected in a more cautious positioning of the Fund.

Oil & Natural Gas

Oil entered the year with an inventory overhang in an otherwise relatively finely balanced market. This inventory overhang is rapidly diminishing as recent disruptions in the Strait of Hormuz have materially tightened the market with circa 10 mmbpd of oil shut ins in the region, together with downstream infrastructure damage (e.g. LNG, refining). Thus, some 10% of global supply has been removed from the market. Offshore oil inventories are rapidly being cleared, with onshore inventories likely to follow, supported in part by coordinated strategic reserve releases from governments. While the duration of the conflict remains uncertain, ongoing disruptions are expected to continue exerting upward pressure on markets. As a result, our view on oil prices has become more constructive:

• We anticipate a higher geopolitical risk premium to be embedded in future oil prices.
• Sustained global demand, partially to rebuild strategic inventories amid heightened geopolitical tensions.
• Increased product premiums, as key consumers aim to diversify their sources of supply. 

Copper

Copper prices, at some $6/lb, reflect structural demand strength, significant supply disruptions from key mines (Kamoa, Grasberg) and cost push (diesel, acid, declining grades). Prices are now nearing incentive levels, which should eventually attract investment. However, a supply response is likely to be slower than historical norms given a thin project pipeline over the next several years, regulatory constraints, and limited skilled labor availability.  Against this backdrop, copper remains a key beneficiary of the energy transition.

Gold & Precious Metals

• Gold sniffed out monetary and fiscal expansion in 2025, while also enjoying strong support from continued central bank buying. By early-2026, this thesis had become maintstream and occasionally attracted speculative excess, which raised the risk of higher volatility going forward.
• The price correction at the onset of the Iran conflict reflects the value of gold as a source of immediate liquidity for squeezed nations, but also investor repositioning in the context of rising real rates and the short-term strengthening of the US dollar. This is not unusual for the gold market, which historically can experience short-term liquidation pressure at the start of a crisis, normally followed by an early recovery as its insurance against geopolitical risk, inflation and monetary debasement gets recognized. This would be the expectation if the Iran conflict continues for several months, especially since the risk of a global economic slowdown increases substantially when global supply chains run out of physical supply of oil, gas, diesel, kerosene, fertilizer and many base chemicals.
• Gold continues to benefit from heightened concerns over monetary credibility, fiscal sustainability, and an emerging multipolar world order. We see the physical bullion market being supported by three distinct market participants:
  • Central Banks, which sharply accelerated their purchases of gold after Russia’s foreign reserves were confiscated in 2022. We believe that this started a multi-year trend whereby Central Banks of vulnerable countries reduce their exposure to the US dollar and diversify into gold and other independent assts. Latest data for Q1 2026 confirms continued systemic buying by Central Banks, irrespective of the bullion price. With geopolitical strife increasing and becoming increasingly erratic, we expect this de-dollarization activity by central banks to continue.
  • Chinese investors, who are diversifying their high savings away from faltering real estate into gold.
  • Global investors buying physical bullion, gold ETFs, and crypto gold as an alternative to low real yielding assets such as bonds, in an environment characterized by deglobalization, rising government spend, geopolitical conflict, and tariff-driven inflationary pressures - conditions that ultimately challenge sovereign balance sheets and currencies.
• Going forward, gold appears well supported by continued central bank buying, but price action will also depend on the fiscal, monetary and policy actions of the U.S. and the dramatic response of many countries to an emerging multipolar ‘order’. With recent investment flows into gold ETFs an increasingly important driver of the price rally, continued price gains are also increasingly a function of (the lack of) confidence in the U.S. dollar and U.S. Treasuries, and China’s response to a polarizing world. A temporary cooling of these tensions could re-accelerate global economic growth and pause the gold price rally, but it is likely that the disruptive changes to the global order will continue to emphasize the need for diversification away from the U.S., thereby supporting gold.
• Precious metals equities benefited from solid expansion in operating margins in 2025, but cost pressures are becoming increasingly apparent. Valuations have generally caught with the bullion price but are not excessive and pockets of value remain. However, precious metal equity performance continues to show a wide divergence, with key drivers being capital allocation, M&A, operational discipline, currency and country risk. This offers active portfolio management opportunities to exploit this wide dispersion.

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