Global equities advanced strongly during the quarter as easing geopolitical concerns, resilient earnings, and continued capital spending tied to artificial intelligence supported investor risk appetite. Market leadership was concentrated in technology, semiconductors, and related infrastructure companies, while emerging Asian markets with exposure to the semiconductor supply chain were notable contributors.
Fixed income returns were more subdued. Bond markets reacted to shifting expectations for inflation and monetary policy, with energy price volatility and central bank caution influencing yields. Credit markets generally remained supported by stable corporate fundamentals, although rate sensitivity continued to affect longer-duration holdings.
In Canada, economic conditions remained uneven. Trade uncertainty and softness in parts of the domestic economy weighed on growth, while household spending showed resilience. Inflation pressures rose earlier in the quarter amid elevated energy prices, then eased as oil prices retreated following de-escalation in the Middle East.
Performance for the quarter was positive but trailed the benchmark. The OAF Portfolio gained 5.3% in the June quarter, compared with a 10.7% benchmark return, for relative under performance of 5.4 percentage points. Year-to-date, the portfolio returned 3.0% compared with 10.7% for the benchmark. Over longer periods, absolute results remained more attractive, with returns to support continued payouts. The portfolio remained globally diversified, with equity exposure intended to capture long-term growth opportunities and fixed income exposure intended to provide income, stability, and liquidity. Equity positioning emphasized high-quality companies with strong balance sheets, durable competitive advantages, and exposure to structural growth themes. Fixed income positioning emphasized credit quality and duration discipline