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From the desk of the Mackenzie Global Equity & Income Team Q2, 2025
Mackenzie Global Dividend Fund
Highlights:
- The Q2 rally was powered by Information Technology (specifically AI-driven growth stocks) and strong corporate earnings. The Fund gained a healthy return of 1.6% but trailed its MSCI World benchmark, giving back the Q1 outperformance
- Despite market strength, underlying risks are rising. While less aggressive than the initial “Liberation Day” announcement, Trump remains committed to implementing universal tariffs, which could dampen US GDP and fuel inflation. The potential knock-on effects to labor-intensive industries as a result of the administration’s immigration enforcement remains to be seen, potentially adding to further inflation uncertainties.
- The Fund continues to be balanced with a prudent exposure to companies that are well-positioned to benefit from advances in AI yet still have plenty of investments in more defensive areas such as healthcare, utilities, and business services
Global equities rebounded sharply from the April swoon on the back of robust corporate earnings, investor optimism around artificial intelligence, and surprisingly durable economic expansion. The MSCI World index is up 5.7% in Q2 2025, having recovered all its losses posted in Q1. The Fund was up +1.6%, giving back the outperformance from Q1. Year to date the Fund is +3.7% vs +3.9% for the benchmark. Leadership rotated back to technology and AI-exposed industrials, such as semiconductor capital equipment and electrical infrastructure. Information Technology (+16%), Communication Services (+11%) and Industrials (+8%) led the way. Our underweight in the first two sectors combined with lower returns (+12% and +10%, respectively) accounted for over half of the underperformance. Healthcare was by far the worst performing sector (-7.3%), and our overweight also detracted from relative performance versus the benchmark. Indeed, Healthcare as a sector realized among its worst relative performance versus the benchmark in over 20 years. The sector continued to grapple with political uncertainty in the US – from drug-pricing reform proposals to trade/tariff threats and continued skepticism on the effectiveness of modern medicine by the Secretary of Health and Human Services.
Overall market strength masks growing tensions beneath the surface. Stocks seem to grind higher not because of an abundance of good news, but because enough of the bad news (i.e. tariff shocks) has been deferred or at least discounted. The U.S. 10-year Treasury yield bottomed at the end of the quarter but has moved up to 4.4%, unsure of what the ultimate impact of Trump’s reciprocal tariff regime will be given they continue to be a moving target.
Recent economic data is mixed. Real PCE declined in May, and manufacturing sentiment, while stable, remains cautious. Global factory output and capital expenditures are contracting, and central banks are again in a holding pattern, uncertain whether to respond to softening growth or accelerating prices. This is a sticking point in the US, where Fed chair Jerome Powell is believed to be in the crosshairs of the President, who has been vocal and explicit about his desire for lower interest rates. We echo JP Morgan CEO Jamie Dimon’s view that it is “critical” that the central bank remain independent and even perceived influence or tampering could have outsized consequences for global capital flows because it could affect US Treasurys and the dollar, which underpin financial markets worldwide.
Donald Trump’s “Liberation Day” agenda has rapidly redefined U.S. trade relations. A sweeping wave of unilateral tariffs has been unleashed under the guise of reciprocity, targeting countries across Asia, Africa, and Latin America, and drawing sharp rebukes from traditional allies globally, including Canada and Europe. While some levies have been delayed until August 1 to allow for continued negotiation, the policy’s intent is clear: remap the global supply chain around perceived national interest.
Markets initially panicked after the April tariff announcements but subsequently rallied—assuming pragmatism would temper ideology. So far, that’s proven partially correct. The administration has softened certain terms in exchange for supply chain onshoring commitments and trade “frameworks.” However, the cumulative economic cost may start to emerge. If all recent tariff threats become reality, average import duties would move from under 3% at the beginning of the year to over 18% by August. That alone is a ~2% drag on GDP, with 60–80% of the cost expected to fall on U.S. companies and consumers.
Against this backdrop, the U.S. dollar has depreciated, reflecting both rising inflation expectations and ballooning fiscal deficits. Indeed, the dollar index fell almost 11% in the first half of 2025, which is the worst start to the year since 1973 when the Bretton Woods system was effectively abandoned by the US. While the One Big Beautiful Bill Act (OBBBA) avoided a fiscal cliff by extending key TCJA tax cuts, it also introduced sector-specific levies, industrial subsidies, and expanded defense and enforcement spending—funded largely by borrowing. Despite the bill’s potentially stimulative components (e.g., semiconductor tax credits, factory bonus depreciation, and defense outlays), the deficit trajectory remains concerning. And with the Fed now pausing its rate-cut cycle amid policy uncertainty, real yields are under pressure.
Emerging market equities have benefited from the weaker USD and select markets—particularly in Asia—continue to attract capital amid resilient domestic demand and technology tailwinds. Taiwan’s industrial production is surging, fueled by global AI-driven semiconductor demand, and Japan’s business sentiment is recovering, albeit cautiously. European economic activity remains mixed. The ECB is walking a tightrope between stabilizing inflation expectations and navigating Trump’s unpredictable trade posture toward the bloc.
One underappreciated risk for the back half of 2025 is labor market tightness, exacerbated by the administration’s aggressive deportation and immigration enforcement stance. Immigrants have accounted for two-thirds of labor force growth this decade and disproportionately work in sectors most exposed to wage-sensitive pricing—agriculture, hospitality, food processing, and construction. The OBBBA’s massive ICE budget expansion, if executed, could produce long lags of unintended inflationary pressure—especially in services and food which rely more on undocumented immigrants. Already, job vacancies in immigrant-dependent sectors are spiking, and wages at the low end of the income distribution have started to firm. While this may support near-term consumption from lower-income cohorts, it also risks embedding sticky inflation just as the Fed attempts to pivot toward easing. The longer-term productivity implications—if workforce shortages persist—are potentially more concerning, with obvious second-order effects on corporate margins and GDP growth.
In an increasingly bifurcated world investors face a challenge more complex than merely “risk-on or risk-off.” Tariffs, immigration, fiscal imbalances, and foreign policy overhangs are not theoretical; they are present and intensifying. With US free cash flow yields ~100bps below 10-Year Treasurys (the widest spread in two decades), valuations assume a smooth glide path to benign inflation, Fed accommodation, and (eventual) geopolitical stability. It’s fair to say none of those assumptions are guaranteed.
The path forward for our unitholders continues to lie in having balance. While AI and industrial reshoring remain compelling long-term themes, select exposure to defensives—particularly utilities, healthcare, and real assets—offers a cushion against volatility. Cross-asset signals suggest mounting stress: volatility is percolating, gold is up 25% YTD, and Bitcoin has exceeded $100,000 amid crypto-friendly rhetoric from Washington. In short, the market is telling a story of optimism but hedging its bets at the margin. Driving in the middle lane—not aggressively risk-on or defensively retreating—appears prudent. The road ahead may still offer gains, but it is lined with policy potholes and macro landmines. We remain constructive but cautious; our portfolio of high-quality businesses and robust balance sheets remains well-positioned to navigate an increasingly complex world.
What contributed positively to performance?
Two of our top performer companies in the quarter were Microsoft (+26%) and NVIDIA (+38%). After both underperformed in Q1 in part because of the market’s reaction to the release of China’s DeepSeek R1, they both rebounded sharply in Q2 as the market came around to the fact that gains in LLM efficiency might not be so bad for either company, on top of stellar financial results. Demand for NVIDIA’s next-generation Blackwell AI chips remained robust, complemented by strong growth in revenue-generating inference services and networking, driven by NVLink and Spectrum-X Ethernet switch which added two new hyperscaler customers. Microsoft reported strong Azure figures across the board, with an accelerating AI contribution supplemented by strength in the non-AI business driven by increased cloud migrations and data/analytics workloads. Worries around AI demand following the reports of data center lease cancellations were also calmed by management commentary and results. Azure will exit this fiscal year (ending June) likely to account for over 25% of company revenues or $75 billion. This was a <$1 billion business ten years ago.
BAE Systems (+23%) contributed to Q2 performance and is now up over 72% YTD. The re-militarization of Western Europe via US pressure and the geopolitical realities on the continent have resulted in accelerated defense spending by NATO countries, in some cases tripling their spend as a percentage of GDP. If European NATO allies were to hit the target of 3.5% of GDP by 2035, military spending could double from $400 billion to $800 billion. As the largest prime contractor outside of the US, BAE Systems materially benefits from this policy shift and is positioned to organically grow its top and bottom line high-single digits well into the next decade compared to low single-digits the previous decade. While valuations have clearly risen (23x forward P/E), we still believe this is a fair price to pay given the multi-year expansion of its total addressable market.
Spanish Airport operator Aena SA (+13%) also was a standout performer in industrials. Building on top of record visitation in 2024, Spain continues to experience excellent tourism growth. Aviation and retail divisional revenues in Q1 were good, with underlying commercial revenue per passenger improving strongly. Duty-free shops are recovering as refurbishment works come to an end, while car rental and VIP services continue to grow. Aena owns irreplaceable assets with strong market power, considerable room to deploy capital and expand its domestic airport network at a return on capital comfortably above its cost of capital, and plenty of free cash flow to pay out in the form of dividends (4.6% yield).
What detracted from performance?
Apple (-12%) underperformed in Q2 as some of the more compelling Apple Intelligence features have seen delays and concern over potential tariffs have generated investor uncertainty, as most Apple products are made in China and shipped globally. China is also the company’s second biggest profit pool after the US. Apple underwhelmed at its World Wide Developer Conference which led the market to question the lack of progress with its AI initiatives. We continue to own Apple shares as we believe optionality still exists in being able to monetize its over 2.35 billion active users as it sits out the arms race in model training and ultimately integrates LLM agents (3rd-party or otherwise) deeply into iOS through on-device/edge inference and cloud hybridization.
Healthcare was the worst-performing sector in Q2, delivering the weakest relative showing in over two decades and effectively giving up the gains it posted in Q1. The sector had benefited early in the year from a flight to defensives amid tariff fears and macro uncertainty, but that strength reversed sharply as investor sentiment shifted toward risk, growth and AI-driven cyclicals. The reversal was exacerbated by rising long-end rates, which pressured high-dividend sectors like pharma and by continued concerns of HHS head RFK Jr’s policy agenda, proposed Medicaid cuts in the “One Big Beautiful Bill Act”, revived Most Favored Nation drug pricing chatter, and NIH budget pressures. As our largest pharmaceutical position in the Fund, AbbVie (-15% in the quarter) felt the brunt of these headwinds and gave up all of its Q1 gains. The selloff was compounded by a one-time non-cash ~$800M R&D charge tied to recent pipeline acquisitions, which weighed on reported EPS and prompted a modest guidance cut. That said, AbbVie remains one of the most attractively positioned companies in large-cap pharma. Its immunology franchise—anchored by Skyrizi and Rinvoq—continues to deliver double-digit growth. These two therapies were developed to succeed Humira, AbbVie’s former blockbuster, as it faced biosimilar erosion. Together, Skyrizi and Rinvoq now cover nearly all of Humira’s core indications with superior efficacy and safety profiles and are on track to fully replace and ultimately exceed Humira’s peak revenue of over $20 billion by 2027, securing AbbVie’s leadership in immunology for the next decade. Its Botox and aesthetics business adds high-margin cash flow diversification, and its neuroscience pipeline offers longer-term optionality in areas like depression and Parkinson’s. AbbVie also boasts a deep and active late-stage pipeline, robust free cash flow generation, and patent protection on key assets well into the 2030s. Abbvie continues to be our largest healthcare holding, and we remain positive on the company’s long-term prospects.
Motorola Solutions (-8.7%) sold off after results despite showing strength across all headline metrics: 6% revenue growth and over 13% EPS growth on the back of operating margins expanding over 160 basis points. The weakness was attributed to a -2% sequential drawdown on its product backlog, which the market interpreted as a risk to future growth. Taken into context, we are less concerned. Firstly, going into the quarter backlog was elevated relative to historical levels so some normalization was to be expected. Management also guided product backlog to still be over $3 billion by year end, implying acceleration in the order book from here. The services and software backlog remains strong which supports our thesis of continued improvement of mix/margin which will translate into excellent growth of earnings, free cash flow and dividends.
LVMH Group was down -18.6% this quarter and is now down over -23% in 2025. Indeed, the shares have grinded down consistently over the past two years, driven by several factors: continued weakness in Chinese consumer demand (one of their most important markets), pressure in Fashion and Leather goods (their most profitable segment), and cautious spending across the U.S. European luxury goods have also been affected by tariff-related uncertainty. We continue to view these issues as cyclical as opposed to structural, and are confident that LVMH long term earnings power is well in excess of where it sits today. Despite the recent disappointments, LVMH is the world’s leading fashion conglomerate that owns Louis Vuitton and multiple other iconic brands such as Christian Dior, Fendi, Tiffany, Givenchy, Dom Perignon, and Hublot. We remain optimistic on CEO Bernard Arnault – one of the world’s greatest capital allocators – to guide the company through this soft spot.
What changes have we made to the Mackenzie Global Dividend Fund?
We exited our position in Chevron this quarter, amalgamating our position primarily into Exxon Mobil and, to a lesser extent, pipeline giant Williams. While Chevron remains a dream team company benefitting from strong assets in the Permian/DJ basins, LNG exposure in Australia and strong growth in its TCO JV in Kazakhstan, the team found it prudent to avoid the binary outcome of the Hess acquisition / arbitration. While Chevron was ultimately successful in landing Hess (after the end of Q2), along with its low-cost assets in Guyana, Exxon already benefitted from projects in the same block in Guyana. Exxon also exhibits a top decile production growth target of 4% and 10% free cash flow growth, due to strong assets in the Permian following its acquisition of Pioneer, and an industry leading refining and specialty chemicals business. At the time of the trade, the two companies traded at similar valuations, with more certainty provided to Exxon. Despite lower energy prices as a core tenet of the Trump administration, we continue to hold the view that global oil demand will exceed global oil supply in the medium term. Exxon (and Chevron) remains levered to low cost, high growth projects while simultaneously providing the portfolio with an attractive dividend yield.
Sony was sold out of this past quarter. The company has been a long-term holding of the portfolio and one of the earliest adopters of corporate governance reforms in Japan – a theme which we continue to subscribe towards through our other Japanese holdings. As we continued to engage with the company, it became clear there was an increasing reluctance from management to continue streamlining the business segments. With the decelerating pace of corporate improvements, we believe that our remaining Japanese holdings provide more visibility and a better long-term expected return at this time.
Hannover Rueck was sold out of this past quarter. The past quarter revealed just how unforgiving reinsurance volatility has become: the California wildfires and a cluster of smaller events generated €765 million of large-loss claims—75 % above the quarterly budget—pushing the combined ratio to 93.9%. In addition, capacity came back into the market, evidencing a cycle of lower pricing which may cap any margin rebuild. With returns now hostage to climate-driven loss inflation and softer pricing, we felt better risk-adjusted upside existed in other insurance-related stocks, specifically leading global insurance broker Marsh & McLennan.
During a turbulent start to the year with the new US administration, Techtronic’s cost structure came into question as over two thirds of its production base came from China and Vietnam – both of which were under threat of heavy tariffs. As a result, the company is expected to invest a material amount to transform its production base in the US and Mexico. Techtronic earns higher margins than its peers today but sustaining the outperformance could come into question throughout the investment phase. While Techtronic remains on the Dream Team, we felt that the capital invested could be better used elsewhere across the portfolio and exited the remaining shares we owned this quarter.
AstraZeneca was sold out of this past quarter, more as a function of portfolio management as it relates to our pharmaceutical investments. That being said, the investment case had been dented somewhat by mounting governance and regulatory risk in China (~13 % of group sales), increasing probes into insurance fraud and unlicensed-drug imports led management to warn of potential multi-million-dollar fines, on top of the reputational risk. In addition, growth has come down from double-digits to high-single digits and a few late-stage oncology assets have stumbled, leaving the stock potentially vulnerable as the market begins to discount patent cliffs it will be facing in several years. AstraZeneca is still on the Dream Team and we will consider revisiting if they are able to address their long-term pipeline and as they make their way through some of the shorter-term issues.
Contemporary Amperex Technology Co. Ltd. (CATL) is the global leader in electric vehicle (EV) and energy storage systems (ESS) battery manufacturing, playing a critical role in the electrification of transportation and the decarbonization of energy systems. The company commands over 35% global market share and represents over 90% of the global battery profit pool. CATL supplies tier-one OEMs like Tesla, BMW, VW, Mercedes-Benz, and almost all Chinese automakers. CATL’s structural advantages—including 80%+ utilization, lowest capex intensity (<$50M/GWh), and leadership in LFP, LMFP, NCM, and early solid-state - enable it to price below peers while earning superior returns. The company has built a durable advantage through vertical integration, a robust intellectual property portfolio, and scale-driven cost leadership, all of which have positioned it at the center of global EV supply chains. Its innovations in cell chemistry and manufacturing efficiency continue to lower battery costs and extend energy density. What sets CATL apart is its technology-driven strategy that has resulted in first-mover advantages in key areas such as LFP (lithium iron phosphate) battery chemistry, battery-as-a-service (BaaS), and sodium-ion battery development. The company has made strategic investments in upstream lithium, cobalt, and nickel assets, ensuring raw material security, which has been a major hurdle for competitors. In addition, its focus on software-defined batteries and long-cycle chemistries aligns with the accelerating shift toward ESS and other commercial applications. CATL’s leadership position in the EV transition, proven R&D capabilities, and expanding total addressable market underpin its long-term value proposition. CATL’s recent dual listing on the Hong Kong exchange demonstrates the company’s evolution from a domestic Chinese business into a dominant true global company with an expanding worldwide shareholder base. While the battery sector is cyclical and capital intensive, CATL’s ability to consistently compound capital through downturns, its strategic customer lock-in, its alignment with global climate policy objectives combined with fact that we purchased the shares at 15x P/E, 10% FCF yield and a 3% dividend yield give us confidence going forward.
We actually viewed the CATL purchase as an upgrade over the sale of Glencore plc. This is clearly a case where we are moving up the “value chain” as it relates to our investments. That is, we are selling a commodity copper and cobalt producer and buying a value-added manufacturer that is a dominant global battery supplier. While we still view Glencore as having advantaged, low-cost mining assets, elevated energy and labor costs combined with disappointing copper production metrics (output fell 30% YOY) and a depressed coal price made the switch in CATL fairly-straight forward i.e. we feel we were purchasing a better business at greater discount to intrinsic value.
We also sold out of Siemens AG this quarter and used that capital to add to Keyence and Schneider Electric - a higher quality way to invest in several long-term trends: automation, grid electrification, and digital transformation. Both Keyence and Schneider are less capital intensive with higher margins and less complex than Siemens, which still has a an-house financing business (which distorts the balance sheet) and owns over 70% of Siemens Healthineers, a €50 billion medical equipment and diagnostic company. While Siemens remains on the Dream Team, we believe owning more direct “pure plays” at the prices we were able to add to make more sense for the portfolio at this time.
L’Oreal is the largest global beauty and cosmetics company with the widest portfolio and price points across categories such as make-up, skincare, haircare, hair colorants, and perfumes. The company holds some of the world’s most recognized beauty brands such as L’Oreal Paris, Garnier, Maybelline, Lancome, Kiehl’s, La Roche Posay, and CeraVe. L’Oreal is simply the best franchise in global beauty, with a 25-year track record of continued market share gains, consistently beating out competitors in performance, growth, and margins. The company leverages its brand equity and scale advantage to continue to reinvest behind its well-oiled marketing machine to support its brands and execution of new products; this scale advantage is evident through its ability to invest more in marketing in absolute dollars than its two next largest competitors all while maintaining higher margins. We viewed this investment as an upgrade in quality over the sale of Haleon. From a brand perspective, Haleon’s OTC consumer health platform (Sensodyne, Advil, Centrum), holds less pricing power in times of inflation evident through its Gross Margins. In addition, our view of the company’s mid-single digit organic growth profile was upgraded to L’Oreal’s high-single digit. When factored in Haleon’s higher capital intensity requirements, this translates to an overall lower return on capital profile relative L’Oreal over the long-term. Haleon remains on our Dream Team.
Marsh & McLennan is the global leader in insurance brokerage and risk management services through its Marsh and Guy Carpenter segments (roughly 2/3s of revenues), while also maintaining top-tier positions in human capital consulting (Mercer) and management consulting (Oliver Wyman) which accounts for the balance of revenues. With over 150 years of history and a diversified revenue base across insurance, reinsurance, health and wealth advisory, MMC’s strength lies in its scale, intellectual capital, and embedded client relationships. With client retention rates in excess of 90%, the company generates consistent, high-margin free cash flow and operates a capital-light model—characteristics that support its ability to reinvest, pursue disciplined M&A, and return capital to shareholders through a growing dividend and stock repurchases. MMC’s business is relatively resilient through economic cycles, given its counter-cyclical reinsurance operations and mission-critical role in helping clients navigate risks ranging from cyber and climate to geopolitical shocks. The company is well-positioned to benefit from any hardening of the commercial insurance market and elevated demand for risk advisory services amid economic uncertainty. In an environment where stability, pricing power, and recurring revenue are at a premium, MMC’s relatively predictable earnings profile and cash generation provide an attractive combination of offense and defense.
Unilever is a global leader in fast-moving consumer goods, operating across over 190 countries and owning iconic brands such as Dove, Hellmann’s, and Knorr. Its competitive advantage stems from deep brand equity, an unrivalled global distribution network, and decades of investment in local insights and innovation. Roughly 60% of sales come from emerging markets—providing a powerful long-term volume tailwind as rising incomes and urbanization lift per capita consumption of personal care and household products. Unilever’s category leadership and scale allow for reasonable pricing power and even greater cost efficiencies across its supply chain. Its management team has long embraced a sustainability-led business model, which resonates with younger consumers and has translated into increased brand loyalty and premiumization opportunities. Notably, its sustainability credentials also align with growing regulatory pressures and evolving retailer demands globally. The company's recent strategic priorities—such as streamlining the portfolio and sharpening focus on high-growth segments like beauty & wellbeing and functional nutrition—should enhance its earnings quality and long-term margin profile. While short-term headwinds such as cost inflation and FX volatility may affect results, Unilever’s resilient cash flow generation, disciplined capital allocation, and progressive dividend policy support our investment thesis. Over the cycle, we believe Unilever remains well-positioned to outperform through execution, advantaged end market exposures, and its enduring consumer relevance.
Publicis Groupe is the third-largest communications group in the world, operating a diversified portfolio of global advertising, media, and digital marketing assets. The company has evolved into a digital-first, data-driven marketing powerhouse by integrating creative capabilities with consulting, media, and technology, which positions it at the forefront of structural shifts in the advertising industry. A core reason for Publicis’ sustained leadership is its significant investment in data and technology platforms, most notably through its acquisition of Epsilon. This allows the company to provide measurable, targeted solutions to global clients increasingly focused on return-on-marketing investment. With this architecture in place, Publicis is better equipped than peers to address the growing demand for personalized, omnichannel marketing in a privacy-compliant manner. What distinguishes Publicis is its unique ‘Power of One’ model—a fully integrated, client-centric approach that aligns all disciplines around the client. This structure has enhanced client retention, driven market share gains, and allowed Publicis to win key global mandates, notably in sectors like CPG, healthcare, and technology. The company’s diversified geographic footprint and well-balanced revenue base further support resilience through economic cycles. Publicis continues to execute well in a challenging macro environment. Its debt-free balance sheet, consistent free cash flow generation, and disciplined capital return policy offer further downside protection. Trading at a material discount to both global consulting and digital agency peers, we believe Publicis represents a compelling opportunity to own a global franchise that is structurally advantaged for a more digitized, data-dependent marketing future.
Cisco remains the global leader in enterprise networking with ~40% market share and a deeply embedded install base of over 1 billion endpoints. Its strength lies in campus networking, where it commands over 4x the share of its closest competitor, supported by a comprehensive portfolio across switching, routing, wireless, security, and network management. Cisco is transitioning toward a more software- and subscription-based model. Following its $28 billion acquisition of Splunk, 56% of revenues are now recurring and two-thirds are software. Cisco is now the #2 global player in cybersecurity and a top five player in observability, markets growing in the low double digits. While campus upgrade cycles have historically been muted in terms of top-line impact, 2025 marks the eighth year since Cisco’s last major refresh - a supportive tailwind. Cisco has also partnered with Nvidia to launch enterprise AI PODs, offering enterprises an on-premise AI-compute solution. At $1 million per unit, even low penetration could provide incremental revenue upside. We believe Cisco’s scale, critical infrastructure role, expanding software footprint, and upcoming product cycle (on top of a 2.6% dividend yield) should provide investors with a relatively safe low double-digit annual return over the next several years.
Qualcomm is the global leader in smartphone semiconductors, holding a dominant 42% market share across Android vendors and supplying high-end wireless modems to virtually all major OEMs. It operates a capital-light, fabless model that delivers gross margins in the mid-50s and returns on capital in the 20–25% range. While Qualcomm’s core handset business remains levered to a mature global smartphone market, the company has steadily repositioned its business by broadening its silicon portfolio across automotive, IoT, and compute verticals—each offering higher content per device and greater addressable markets over time. The company’s Snapdragon platform—integrating CPU, GPU, modem, and AI capabilities—is increasingly tailored for emerging workloads, from driver-assistance in vehicles to on-device generative AI. Qualcomm’s custom Oryon CPU, Adreno GPU, and Hexagon NPU now rival best-in-class offerings and demonstrate the firm’s evolution from a mobile radio specialist into a diversified edge compute company. Despite the inevitable decline in revenues from Apple over the next few years as Apple in-sources its modem business (less than 15% of earnings), Qualcomm maintains deep competitive moats in IP (via its QTL licensing arm) and scale in premium Android chipsets. Its automotive segment, underpinned by a $45B design win pipeline, and its ARM-based PC ambitions, suggest a long runway for diversified growth. Trading at ~13x forward earnings, over 7% FCF, with a 2% yield and a net cash balance sheet, Qualcomm is priced as if its legacy business is in terminal decline. We believe that underestimates the durability of its IP, its leadership in wireless connectivity, and its strategic optionality across multiple edge markets.
To make room for Cisco and Qualcomm, we sold out of Oracle this quarter. While we acknowledge the company’s success in migrating database clients over to the cloud, the excitement surrounding the company’s guidance for continued acceleration of growth in the Oracle Cloud Infrastructure (OCI) segment has led to increased risks. Oracle is projected to be cash flow negative this year as they ramp up their cloud spend and are doing so on a much more levered balance sheet. This is not something the other cloud service providers faced as they accelerated their infrastructure expansion, and leaves Oracle with a smaller margin of error if there was a sudden shift in the market environment or outlook. Oracle remains on our Dream Team and we will look to revisit if the opportunity presents itself.
Air Liquide is a global leader in industrial gases and a long-standing member of the Mackenzie Global Dividend Fund’s Dividend Dream Team. We recently met CEO Francois Jackow and were impressed by the degree to which he is transforming the organization, which is not easy to do at a company with a 120+ year operating history. Jackow has brought a sense of urgency and challenging the company to address inefficiencies that should allow Air Liquide to bring its margin and return on capital employed closer to industry-leader Linde over time (also a holding in the Fund). Whether it’s leveraging shared services, better alignment of sales incentives and bonus schemes to project profitability, or pruning the less attractive parts of the portfolio, they are tackling aspects of the business that are under their control. The industrial gas industry remains a highly attractive one: an oligopolistic market structure with substantial pricing power, resilient demand, and high barriers to entry due to scale, regulatory expertise, and long-term customer relationships. Air Liquide's core strategy centers on building on-site gas production facilities tied to long-term take-or-pay contracts, a model that delivers stable, inflation-linked cash flows. Its industrial gas operations are mission-critical to a wide array of customers—ranging from semiconductor fabs to hospitals—yet typically represent a modest proportion of their total production costs. This dynamic, combined with high switching costs and stringent reliability requirements, reinforces customer stickiness and limits competitive encroachment – these are effectively local monopolies. We were happy to reintroduce Air Liquide into the portfolio.
| YTD | 1 Yr | 2 Yr | 3 Yr | 5 Yr | 10 Yr | Since PM change* |
Mackenzie Global Dividend Fund - Series F | 3.7% | 14.0% | 16.9% | 16.9% | 12.4% | 11.0% | 11.9% |
MSCI World NR Index (CAD) | 3.9% | 15.9% | 20.0% | 20.5% | 14.6% | 11.6% | 12.3% |
Morningstar Global Equity Peer Group | 4.1% | 13.1% | 15.7% | 15.9% | 10.9% | 8.5% | 9.0% |
Percentage of Peers Beaten | 45 | 59 | 65 | 66 | 73 | 92 | 94 |
Portfolio Management Team
Darren McKiernan, Head of Team, Senior Vice President, Portfolio Manager, Investment Management, Mackenzie Investments
Katherine Owen, Vice President, Portfolio Manager, Investment Management, Mackenzie Investments
James Barnby, AVP, Portfolio Manager, Investment Management, Mackenzie Investments
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns as of June 30, 2025 including changes in security value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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This document includes forward-looking information that is based on forecasts of future events as of June 30, 2025. Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.
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On July 26, 2013 the Mackenzie Global Dividend Fund changed its mandate from investing in equity and fixed income securities of companies that operate primarily in infrastructure related businesses to investing primarily in equity securities of companies anywhere in the world that pay or are expected to pay dividends. The past performance before this date was achieved under the previous objectives.
The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund.