Putnam US Value Equity
Mandate commentary
Q1 2026
Highlights
① In a muted environment for U.S. stocks, the portfolio performed mostly in line with its benchmark, the Russell 1000 Value Index.
② The oil shock drove turbulence, as commodities dominated inflation fears.
③ Global growth expectations will be adjusted if conflict extends beyond summer.
Mandate overview
For the quarter, U.S. equities, as measured by the S&P 500 Index, generated the worst quarterly performance since the third quarter of 2022. The quarter brought volatility in the technology sector, particularly software stocks, which struggled amid concerns that AI tools might replace or significantly reduce demand for traditional software products. Declines in March were driven by the Iran conflict, which began in late February with airstrikes from the United States and Israel on multiple sites across Iran. The conflict pushed up oil prices and raised inflation fears and anxiety over the potential for escalation or a prolonged war. Throughout the month of March, investor sentiment shifted rapidly between fear and optimism in response to headlines.
The portfolio performed mostly in line with the benchmark during the period. Weakness from stock selection was mostly offset by strong sector allocation decisions.
Stock selection was weakest in the information technology, financials and health care sectors. Strength in materials and energy contributed positively. From a sector allocation perspective, relative performance benefited from relative overweight positions in energy and consumer staples, and relative underweight positions in communication services and financials.
Mandate: U.S. large cap value concentrated SMA.
Performance contributors
Seagate Technology: the out-of-benchmark position was a top contributor, as fundamentals in the digital storage industry strengthened and the company’s profitability improved.
Exxon Mobile: an overweight was a positive contributor, as the company benefited from increased oil prices resulting from the U.S. conflict with Iran.
Valero Energy: an overweight was a positive contributor as the company benefited from oil supply shortages resulting from the US conflict with Iran.
Performance detractors
Microsoft: an out-of-benchmark position was the top detractor. The company is perceived to be a laggard in the development of artificial intelligence.
Capital One Financial: the portfolio’s overweight position detracted. The stock has underperformed, due to the market’s concerns for an increased risk of recession.
American International Group: a relative overweight weighed on results. Property and casualty insurers briefly underperformed on pricing concerns.
Total gross returns:
Total return | QTD | YTD | 1YR | 3YR | 5YR | since INC. (NOV. 14, 2016) |
PUTNAM US VALUE EQUITY | 1.84
| 1.84
| 22.88
| 20.27
| 15.93
| 15.58
|
Mandate repositioning
At the close of the first quarter, U.S. markets were adjusting to a sharply changed environment, driven largely by the conflict with Iran. Prolonged tensions risk higher oil prices, supply disruptions and slower global growth, which could weigh on corporate earnings, despite still-positive expectations. While markets have responded rationally, valuations remain elevated and could face further pressure amid geopolitical uncertainty and upcoming mid-term election risks.
At the same time, the market narrative around AI remains overly simplistic, with outcomes likely falling along a spectrum rather than clear winners and losers. We continue to focus on identifying differentiated opportunities through bottom-up research. Despite current uncertainties, resilient consumers and strong capital investment (particularly in AI) support a cautiously constructive outlook for U.S. markets.
By sector, we remain within +/-5% of benchmark weight. Currently, the largest overweight sectors are the consumer discretionary and energy sectors. While financials is the largest weight in the portfolio, it is currently underweight. Communication services, industrials, real estate and information technology also remain below benchmark weight.
Market overview: oil shock drove turbulence, commodities dominated inflation fears
The first quarter of 2026 began with supportive economic momentum; improving manufacturing, a stabilizing U.S. housing backdrop and contained inflation. However, this quickly pivoted as the conflict in the Middle-East involving Iran — along with trade disruption around the Strait of Hormuz — pushed energy commodities higher. The energy shock drove volatility across global equities, yet the underlying backdrop proved more resilient than headlines implied, reinforcing the value of diversification.
Canadian equities were resilient, as higher crude oil prices supported the energy sector and helped offset weaknesses in rate-sensitive areas. Defensive sectors, dividends and real-asset exposure provided additional insulation versus many global peers. U.S. fundamentals remained solid, but sentiment weakened as oil lifted inflation expectations. Investors rotated away from expensive, rate-sensitive growth stocks, making performance more about a valuation reset than deteriorating earnings.
Market outlook: global growth expectations will be adjusted if conflict extends beyond summer
Looking ahead, oil and energy prices remain the central swing factor. A credible path to de-escalation could shift attention back to the positive economic cycle evident early in the quarter; a prolonged disruption would maintain inflation uncertainty and elevated volatility.
In this environment, commodity producers and value‑oriented equities may provide resilience, while long‑duration assets and oil‑importing regions face greater sensitivity to energy-price fluctuations.
Diversification and flexibility remain central to portfolio construction
Canadian equities offer exposure to energy and materials supported by global supply constraints. International developed and emerging markets present valuation‑driven opportunities and help diversify away from concentrated U.S. equity exposure.
Within fixed income, short‑ to intermediate-duration strategies can balance yield and interest‑rate risk, complemented by high‑quality corporate bonds for disciplined income generation. Key areas to watch will be central bank policies, as they look at the impact of higher energy costs and their indirect tax on the consumer.
To discuss your investment strategy, speak to your IG Advisor.
Azure Managed Investments™ provides discretionary investment management services distributed by IG Wealth Management Inc., Investment dealer. We will manage your Azure Managed Investments Accounts on a segregated basis in accordance with your investment policy statement and the resulting mandate selected by you. Mandates will be managed by I.G. Investment Management, Ltd. and partner organizations. You are required to make a minimum initial investment of $150,000; please read the Azure Managed Investment Account Agreement for complete details, including fees and expenses.
This commentary may contain forward-looking information, which reflects 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 do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 31, 2026. 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 commentary is published by IG Wealth Management. It is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. It may contain certain forward-looking statements regarding the market conditions which are based upon assumptions believed to be reasonable at the time of publishing. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Past performance may not be repeated and is not indicative of future results. Actual performance may vary due to a range of factors including but not limited to current market conditions, timing of contributions and withdrawals, client-imposed restrictions, fees, expenses, tax considerations and other individual circumstances. There are no assurances that any mandate will achieve its objectives and/or avoid any losses.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
©2026 IGWM Inc.