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Written by the Mackenzie Betterworld Team
Portfolio and Sectors review
The Mackenzie Betterworld Global Equity Fund underperformed its benchmark (MSCI World TR Index C$) for the month. Exposure to the health care and information technology sectors detracted most from portfolio performance. Throughout the month, investors rotated away from mega cap stocks and into the undervalued areas of the market as speculation around the direction of central bank rate decisions grew higher. Mixed US economic data put H2 expectations into question. Although U.S. retail sales and housing/building permits numbers came above expectations, it was the disappointing jobless claims number, suggesting a cooling labor market, that got most of the market’s attention. Transunion posted a 3rd quarterly beat in a row, seeing it’s share price surge over +20% during the month. The company has recently showed strong wins in its data breach business. The level of breach activity continues to rise, making this revenue stream an upside driver over time and reinforcing Transunion’s competitive identity protection offering.
The Mackenzie Betterworld Canadian Equity Fund outperformed its benchmark (S&P/Composite Index) in July. Stock selection in industrials and a large underweight to the energy sector contributed positively to the fund’s performance. Over July, Canada benefitted from the rotation into value and commodity exposure. Apparel retailer and designer Aritzia was a strong performer throughout July for the fund. 90% of the company’s products come from in-house designed brands, targeting women aged 15 to 45. The company has 119 stores across North America and an e-commerce business through Aritzia.com. New stores continue to bring in new customers and carry excellent economics, boding well for the second half of the year. Solid inventory management supplements earnings growth, setting the stage for significant cash generation towards the end of F25 and through F26.
Company Engagements
The Betterworld team recently met with two portfolio companies: Canadian crop supplement company Nutrien, and US financial, JP Morgan.
Nutrien is a leading provider of crop inputs and services, helping to safely and sustainably feed a growing world. The company operates a world-class network of production, distribution and agricultural retail facilities that efficiently serve the needs of growers. The company is well aligned with Mackenzie Betterworld’ s engagement theme of feeding the future and addressing the challenge of feeding nearly 10 billion people by the year 2050. The company has seen positive trends in emissions reductions and is far below peers when it comes to emission intensities. However, the team took the opportunity to question Nutrien on their strategic path to net zero and asked the company to provide more clarity on their decarbonization strategy. As a growing population increases demands on food production and the fertilizer needed to support crop yields, Nutrien’s carbon emissions will rise with the expanding use of crop supplements. The team continues to support Nutrien’s efforts to continue their certification process with the Science Based Targets initiative to progress on their decarbonization initiatives.
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