Update on the IA Clarington Agile Global Total Return Income Fund

When we look at duration, we said that the year would be a tail of two halves. First half, probably a shorter duration bias, second half, longer duration bias.

When we look at duration, we said that the year would be a tail of two halves. First half, probably a shorter duration bias, second half, longer duration bias. We're currently at six years. We feel, I would say three or four points would probably make sense. Number one, we think that the employment situation in the US is going to slow down. We think that as more news comes about tariff, inflationary impacts, that may take some of the inflation out of the markets. And we see that the trend in inflation is on the lower side. So with that longer duration, we could take advantage of lower rates.

We see a lot of opportunities from an emerging market situation and foreign situation. Let's start with Europe. We feel that we can capture a currency gain together with some income. So we like that because of two reasons. One, we think the economy is bottoming out in Europe, and number two, they have the fiscal policy that can accelerate that growth over time. Now, let's go around Asia. We'll use Australia. In Australia, we like it as a China proxy because where its location is closer to China, and it will have a benefit as we see new growth in China. So we like Australia from two standpoints, one, potentially from a currency element relative to Canada, and two, because we get a higher income, probably about a percent and a half relative to Canadian assets. From the emerging market side, let's look at three areas. Indonesia, again, a China proxy, getting close to 6%.

We like that yield, and again, we have potential currency movement relative to Canada. So we like that for that two reasons. Now let's go to Latin America. When we look at Brazil, we're getting between 11 and 14% on a short-dated bond five years. So we have a nice carry bond together with potential currency kick also, so a total return that could approach 10 plus or more percent. When we look at Mexico, again, proximity next to US, also 8.9% to 9%. Basically income relative to Canada. That makes a lot of sense. So again, we can pick up that return plus potential currency returns. So we see the foreign opportunity set from Europe to Asia to Latin America as adding income and potential currency gains, so looking at a nice total return with less volatility.

When we look at Canada, we see that the Canadian economy we think has bottomed because they were very aggressive to cut rates at the beginning. So now what's embedded in the process, it's between zero rate cuts and one rate cut. And we think that as economic activity improves, maybe we go to zero. If it slows down, maybe it goes to one. But I would say between zero and one cut makes sense. And we do think over time that the Canadian economy will show some nice positive momentum.