Monthly commentary - Mackenzie Greenchip Team

March 31, 2025

Portfolio Manager Monthly Insights

Key takeaways

Environmental sectors generally traded in line with broad benchmark losses while the Greenchip strategy outperformed.

Supporting Greenchip, in both the month and the quarter, was a relative underweight in American stocks, especially in the consumer and technology sectors, and a relative overweight in Europe and, to a lesser extent, in Brazil.

Veolia, our largest holding, gained more than 10% in March, while Enel, and Eletrobras of Brazil, added more than 5% for the month. Countering some of these gains were continued losses in Japanese industrials and Chinese solar.

Macroeconomic recap

The first quarter of 2025 ended with more market volatility, unpredictable and rapidly shifting news flow and policy, and increasing geopolitical and economic turmoil. Although global (and especially American) asset markets are well-trained to ‘buy the dip’ and look past near-term uncertainty, there are increasing signs that nervousness is growing. While overall equity markets turned in their worst quarterly performance since 2022 a bigger market regime change was afoot as US equities underperformed the rest of the world by the most since 2002. Europe led outperformance, helped by low valuations and by plans — led by Germany — to loosen fiscal spending limits in order to support investment in defense and infrastructure. Despite weak equity markets, bonds offered little respite, and the US dollar — traditionally considered a safe haven — was very weak. Investors are finding it hard to justify the enormous valuation gap between US assets and the rest of the world as America contends with a world that is increasingly united against what it perceives as hostile policy from Washington. Furthermore, growing questions about the resource requirements, use value, and competitive advantages enjoyed in AI technology have also hit what is perceived as America’s strongest economic leadership. Commodities were mixed for the quarter and the month, with copper and precious metals standing out for strength, while major energy commodities were largely flat.

Current positioning and Outlook

Environmental sectors generally traded in line with broad benchmark losses while the Greenchip strategy outperformed. Supporting Greenchip, in both the month and the quarter, was a relative underweight in American stocks, especially in the consumer and technology sectors, and a relative overweight in Europe and, to a lesser extent, in Brazil. While European industrials traded very robustly early in the month with the announcement of the aforementioned German spending plans, by the end of the month general economic and specific tariff concerns had erased much of these gains and most of the strength was realized in utilities. Veolia, our largest holding, gained more than 10% in March, while Enel, and Eletrobras of Brazil, added more than 5% for the month. Countering some of these gains were continued losses in Japanese industrials and Chinese solar. The team continues to selectively rebalance in the face of major swings in value while adding to the list of candidate investments that could be made opportunistically in weak markets.

Learn more about the team

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 March 31, 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.

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.