Published Date: May 8, 2026
Author: HANetf
Market in review
The Middlefield Canadian Enhanced Income ETF (MCTP) returned +12% (local currency) in Q1’26, outperforming most developed market dividend indices, while also increasing its distribution by 5%.[1] This was achieved even though the quarter experienced heightened volatility, initially driven by AI-led disruption in the technology sector, followed by a sharp escalation in geopolitical tensions from the war in Iran. Disruptions in the Strait of Hormuz, through which ~20% of global oil and LNG supply flows, triggered one of the most significant energy supply shocks in recent history.[2] Crude oil prices doubled, driving investor rotation into Energy equities, making it the best performing sector during the quarter.[3]
Notwithstanding these challenges, Canadian equities demonstrated notable outperformance. As a net exporter of energy and a key global supplier of critical minerals, including gold, potash, and uranium, Canada directly benefits from higher commodity prices and rising demand for secure and reliable supply.[4] With supply disruptions unlikely to ease in the near term, these dynamics may sustain elevated commodity prices and further strengthen Canada’s relative advantage.
Despite this favourable backdrop, Canadian equities trade at a ~3x valuation discount to global markets.[5] We believe this gap undervalues the strength of Canada’s resource base, along with the robust cash flows, balance sheet quality, and attractive dividend yields across the Fund’s core sectors such as Energy, Financials, and Real Estate.
Quarter performance – contributors and detractors
Energy
Energy was the largest contributor to MCTP’s Q1’26 performance, supported by elevated commodity pricing and disciplined operational execution. The Fund’s energy exposure remains concentrated in high-quality producers and pipeline operators with conservative balance sheets, low leverage, disciplined capital allocation, and attractive dividend yields. While Energy was a key contributor, select non-held names, including Cenovus Energy, rallied sharply during the quarter, resulting in modest opportunity cost within our energy weighting.
Canadian Natural Resources, the Fund’s second-largest holding, returned +47% in the quarter.[6] Performance was driven by higher realised commodity prices, record production volumes, and efficiency gains, reinforcing the company’s disciplined capital allocation framework. Notably, 2026 marked Canadian Natural’s 26th consecutive year of dividend increases, an achievement that underscores the durability of its business model and long-term focus on shareholder returns.[7] Whitecap Resources, the Fund’s largest holding, delivered +38% total return in the quarter, benefiting from higher oil and natural gas prices.[8] Other key holdings, including Peyto and Topaz, contributed positively, reflecting a favourable backdrop for Canadian E&P and royalty businesses. Overall, the sector’s performance underscores the strength of the Fund’s positioning in high-quality energy companies leveraged to improved commodity pricing.
Financials
Financials were a positive contributor to performance in Q1’26, driven primarily by stock selection. AGF Management, an out-of-benchmark holding, returned +25% during the quarter, benefiting from an increase in net flows, higher management fees, and continued industry consolidation, all of which drove multiple expansion.[9]
While the Fund remains modestly underweight Financials, positioning within the sector was additive. Underweight exposure to Bank of Nova Scotia and lower-quality credit segments helped mitigate risk from credit concerns. The Fund favours well-capitalised institutions with attractive dividend yields and high-teens ROE targets.
Real Estate
Real Estate was a minor detractor to the Fund’s performance in Q1’26, as the positive stock selection effect was offset by the Fund’s overweight allocation to the sector amid a volatile rate backdrop with rising longer-term rates and inflation expectations. While stock selection within Real Estate was strong, driven by overweight positions in higher-quality operators, the higher allocation to the sector served as a headwind, and weakness in H&R REIT further weighed on relative performance during the quarter.
Positive stock selection was driven by overweight positions in higher-quality operators, including Sienna Senior Living, Primaris REIT, and First Capital REIT, each delivering low double-digit total returns during the quarter.[10] These names benefited from strong asset-level performance and stable demand profiles, reinforcing our focus on high-quality REITs with durable cash flows and attractive income characteristics. Underlying fundamentals across retail, industrial, and seniors housing remain robust, and the sector overall continues to trade at a significant discount to NAV.
Buys and Sells
During the quarter, the Fund initiated a position in Barrick Mining following a 140% increase in its quarterly dividend while taking advantage of share price weakness resulting from a short-term drop in the gold price.[11] The decision is supported by a constructive outlook for bullion prices, underpinned by geopolitical uncertainty, persistent fiscal deficits, and central bank demand. Additionally, Barrick’s plan to IPO a portion of its asset base later in the year provides an additional catalyst to unlock shareholder value.[12]
The Fund trimmed its position in Nutrien after a +25% return in Q1’26, driven by tightening potash markets amid ongoing supply disruptions.[13] Although Nutrien remains a core holding due to its exposure to critical minerals, the position was trimmed to lock in gains and reallocate capital toward opportunities with more attractive near-term upside, including gold equities.
Industry overweights and underweights
Real Estate remains the Fund’s largest overweight, supported by discounted valuations and stable operating fundamentals. We believe this valuation disconnect is unsustainable over the medium term as institutional capital and M&A re-engage with the sector. Energy also remains a key overweight in the Fund, underpinned by exposure to high-quality Canadian producers and pipeline operators with strong balance sheets, disciplined capital allocation, and long-duration, contracted cash flows.
The Fund is underweight in Communication Services, where elevated competitive intensity, moderating subscriber growth, and ongoing pricing pressure limit upside relative to our core holdings across Energy, Financials, and Real Estate.
Macro Outlook
The geopolitical environment is beginning to stabilise amid signs of de-escalation in the Iran war, helping restore broader market participation, following a quarter defined by sharp rotations and commodity-driven leadership. Having said that, we believe global demand for reliable sources of oil, natural gas, potash, uranium, and gold will continue to increase, reinforcing Canada’s role as a key supplier in an evolving geopolitical landscape. Importantly, Canada’s structural advantages as a net exporter of energy and a leading producer of critical minerals remains an underappreciated story.
Against this backdrop, Canadian equities are trading at a meaningful discount to global peers despite delivering double-digit earnings growth and compelling dividend yields.[14] Meanwhile, domestic policy initiatives centred on expanding trade relationships, deregulation, incentivising capital investment, tax cuts, and nation-building infrastructure projects are providing additional momentum.[15]
MCTP’s core exposure to energy, financials, and real estate are direct beneficiaries of these durable tailwinds. By emphasising high-quality businesses with solid balance sheets, robust free cash flow generation, and a demonstrated ability to grow dividends, MCTP may offer an attractive blend of growing income and capital appreciation in the year ahead.
[1] Source: Middlefield, Bloomberg. Data as of 31.03.2026. Market indices include S&P 500 High Dividend Index, MSCI World High Dividend Index, MSCI Europe High Dividend Index, and MSCI Emerging Markets High Dividend Index
[2] Goldman Sachs Research, “Iran Conflict: How Long, and How Bad?”, 20.03.2026
[3] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[4] Goldman Sachs Research, “Iran Conflict: How Long, and How Bad?”, 20.03.2026
[5] Source: Middlefield, Bloomberg. Data as of 31.03.2026. MSCI World Index used as global index for comparison
[6] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[7] Canadian Natural Resources, “Corporate Presentation”, April 2026
[8] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[9] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[10] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[11] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[12] BNN Bloomberg, “Barrick plans IPO of North American Gold Assets”, 05.02.2026
[13] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[14] Source: Middlefield, Bloomberg. Data as of 31.03.2026
[15] Government of Canada, “From Reliance to Resilience: Buy Canadian”, 10.11.2025
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