Monthly commentary - Mackenzie Betterworld Team

Written by the Mackenzie Betterworld Team

Prospects and Outlook

Canadian equity performance has been lagging the US market. Even though the TSX has outperformed the S&P 500 only once in the last eight years (2022); and only twice over the last 14 years (2016, 2022) there are reasons for optimism including a rebound in commodity prices for which the TSX has been positively correlated historically. Another sign of optimism is the wide valuation discount to the S&P 500 when comparing with the S&P/TSX on a 12 month forward relative P/E basis.

Portfolio and Sectors review

With regards to the Mackenzie Betterworld Global Equity Fund, stock selection within industrials and financials contributed most to portfolio performance. The team’s holding in Bloom Energy (+45% in local currency on the month) generally benefited from improving investor sentiment in the clean and renewable space along with moderating inflation statistics. Bloom’s management is highly focused on driving profitable and cash-generative growth. Customers note Bloom’s power generation is cost competitive on a stand-alone basis (no subsidies) and can be rapidly deployed and avoid the need to wait for grid connections. 

Within the Mackenzie Betterworld Canadian Equity Fund, stock selections to utilities and industrials contributed positively to fund’s performance. Portfolio holding Boralex was up +26% for the month. Renewables posted a welcome recovery in May with the catalyst being Microsoft’s announcement of a $10 billion agreement with Brookfield to supply 10 GW to support data center power demand from the rapidly growing and power-hungry generative AI demand.

Financials detracted most from performance during the month. Positive contribution from the Royal Bank (up +11.7% in May) and Manulife (up +11.5%) were offset by underperformance from TD Bank (-6.70% for the month) due to stock specific US anti-money laundering (AML) issues.

2024 Responsible Investment Association Annual Conference – Vancouver

Panel participation - Innovations, Developments, and Opportunities: Canada’s Energy Transition

Session Description: As Canada charts its path toward an energy transition, new innovations and the adaptation of existing technologies are essential to reducing our collective carbon footprint. This panel will examine the latest advancements and innovations across the energy sector including nuclear, carbon capture and renewable technology, and assess the role that each will play this transformative journey. How are current technologies are being repurposed for carbon reduction, and which new technological pathways are real and credible? What opportunities are ripe for investment in this rapidly evolving sector?

The Betterworld team participated in a lively discussion that highlighted portfolio positioning in proven and profitable energy transition solutions in renewable power and Canada’s nuclear leadership in zero carbon emission baseload power generation. At the same time, the team looks forward to developing opportunities in emerging technologies such as carbon capture and small modular reactors.

During the session, the team described to the audience the positive impact potential of Canadian developed proposals that could contribute to Canada’s energy transition. 

Proxy Voting

In May, the Betterworld team participated via proxy in 50 company meetings – 24 in Canada, 20 in the US, 5 in Europe and 1 in Hong Kong:

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