Each quarter, our Investment Management teams publish their key observations and portfolio updates across Global Equity and Fixed Income markets. This is a summary of our views for the First Quarter of 2026. You can download the full reports via the links shown below.

Key Observations

During the first quarter, the S&P 500 posted a total return of -4.33% in U.S. dollar terms, which improved to -2.84% in Canadian dollar terms, while the S&P/TSX Composite Index delivered a positive total return of +3.94%, driven mainly by energy stocks. Current data indicate that economic growth is moderating but remains positive, the consumer continues to spend at a healthy pace, and credit markets are not signaling systemic stress.

The tone in the market changed significantly on February 28th when the United States and Israel launched airstrikes across Iran. While the conflict created heightened uncertainty, our base case is that the impact on the markets from the war will be short lived, supported by historical evidence showing the S&P 500’s typical trajectory around geopolitical events dating back to World War II. Even if the conflict ends quickly, a persistent war premium in the oil futures strip would likely benefit energy producers.

At its March meeting, the Federal Open Market Committee maintained the target range for the federal funds rate at 3.50%–3.75% and appears in no rush to lower interest rates. Meanwhile, the earnings backdrop remains strong and supportive of equities, with five consecutive quarters of double-digit earnings growth for the S&P 500 and strong forward earnings expectations for 2026 and 2027.

In Europe, Eurozone business activity accelerated faster than forecast in February as manufacturing swung back to growth for the first time since October. In Japan, the Bank of Japan’s quarterly Tankan survey reached its highest level since Q4 2021, while returns were also positive reflecting the enthusiasm of ongoing changes to corporate governance and a pro-growth mandate. In addition to positive economic indicators, corporate earnings were revised higher across most geographic regions in the early part of 2026, with Europe being the notable exception.

In summary, the combination of resilient economic growth, continued earnings momentum, and the prospect of a relatively swift resolution to the conflict has kept us constructive on equities going forward, despite elevated geopolitical uncertainty.

North American Equity Update

Peter Jackson, HBSc, MBA, CFA

Chief Investment Officer

Portfolio Manager, North American Equities

Our overall equity exposure decreased modestly from 99% to 95%, while cash increased from 1% to 5% during the quarter. Within equities, U.S. exposure edged down slightly from 53% to 52%, while Canadian exposure saw a more notable reduction from 46% to 43%. Many client portfolios are invested through our North American plus International Equity strategy, which remains at 80% US/Canada and 20% International equities currently; as a result, the effective weights of U.S. and Canadian equities within total equity allocations are proportionally lower due to exposure to international markets.

In our North American strategy, we established the following positions:

TJX Companies is a liquidation retailer with 5,200 stores today and plans to grow to 7,000 stores as it enters new markets in Europe and Latin America. We expect TJX to be able to consistently grow earnings at 10%+ for years to come through a combination of same-store-sales growth, store unit growth, and margin expansion.

Union Pacific Railroad is the second largest Class 1 railroad with industry-leading profitability. It is pursuing a merger with Norfolk Southern to establish the first US transcontinental railroad by the first half of 2027 which, if approved, will enhance its competitive advantages.

Canadian Natural Resources Limited is the largest crude oil producer and the second largest natural gas producer in Canada. Its vast reserves allow the company to generate substantial and sustainable free cash flow. CNQ has increased its dividend 25 consecutive years with a 21% compound annual growth rate.

Rockpoint Gas Storage has natural gas storage facilities in western North America (California and Alberta). Free cashflow conversion of EBITDA is high as they have little capital spending beyond modest maintenance. They have a small trading operation, which provides extraordinary additional profits in times of energy volatility like right now.

MDA Space is a 45-year-old Canadian world leader in space equipment manufacturing (they make the Canadarm robotic arm on the International Space Station). Industry demand has taken off in recent years with launch costs falling dramatically. The SpaceX IPO will only bring increased attention to the space economy and the more modestly priced MDA stock.

Gildan Activewear has historically dominated the activewear business. They recently acquired competitor Hanesbrands, which dominates an adjacent market of branded underwear. We see the integration of the two companies as a match made in heaven, allowing Gildan a low-cost entry into the branded retailer channel.

A detailed review of each holding can be found in the full report per the link above.

Global Equity Update

Phil D’Iorio, MBA, CFA
Portfolio Manager, Global Equities

Global equity markets got off to a good start in 2026. However, several global indices finished the first quarter with negative returns. Canada and Japan were able to buck this trend for different reasons. In Canada, returns were positive due to its large energy sector weighting. In Japan, positive returns reflected enthusiasm around its pro-growth mandate.

There were a lot of good things happening around the world just prior to the outbreak of the conflict involving Iran. Economic indicators had improved, corporate earnings revisions had turned positive in many parts of the world, and stock market performance had broadened out to more sectors. Corporate earnings were revised higher across most geographic regions, with Europe being the notable exception

Eurozone business activity accelerated faster than forecast in February as manufacturing swung back to growth for the first time since October. The Bank of Japan’s quarterly Tankan survey, a measure of manufacturer optimism, reached its highest level since Q4 2021. The global Purchasing Managers Index also turned up in the early part of 2026.

Our base case is that the war with Iran will be short-lived. President Trump has shown a tendency to respond to market stress, and U.S. midterm elections in the fall are an added incentive for him to de-escalate the conflict and come to a resolution. We are monitoring the situation carefully and will make adjustments to our portfolios as needed.

New positions added to the Global Strategy:

Investor AB is a leading Nordic industrial holding company with stakes in global firms such as Atlas Copco, ABB, and AstraZeneca. Its business model centres on active ownership and long-term operational excellence. We are attracted to its high-quality assets, disciplined approach, and strong long-term track record.

Hoya Corporation is a global med-tech and high-tech company with leading positions in eyeglass lenses, medical endoscopes, and semiconductor mask blanks. We are attracted to its dominant niche market positions and its consistent ability to generate high returns through disciplined capital allocation.

ASML Holding is the world’s sole provider of extreme ultraviolet lithography machines, making it a critical partner to the global semiconductor industry. We view the company as an indispensable supplier to leading chipmakers and a key beneficiary of continued investment in artificial intelligence.

Ferguson is the leading North American distributor of plumbing, heating, and pipe, valves, and fittings products. We are attracted to its scale advantages in a highly fragmented industry, which have consistently allowed it to capture market share from smaller local distributors.

Union Pacific Corporation operates one of the largest rail networks in North America, connecting 23 states across the western two-thirds of the United States. We are attracted to its high barriers to entry and the strength of its irreplaceable physical infrastructure.

Itochu Corporation is a premier Japanese trading company with a strong non-resource bias and meaningful exposure to stable consumer and retail segments. We are attracted to its resilient cash flow generation, diversified global footprint, and shareholder-friendly policy, including progressive dividends and frequent share buybacks.

Erste Group Bank is a leading financial services provider in the eastern part of the European Union, serving more than 16 million customers. We are attracted to its exposure to faster-growing Central and Eastern European economies, robust capital position, and conservative risk profile.

New positions added to the International Strategy:

BAWAG Group AG has transformed into one of the most efficient retail-focused banks in Europe with one of the lowest cost/income ratios in European banking. They complement organic growth with acquisitions and they continue to generate excess capital for share repurchases and future acquisitions.

DBS Group is the largest Southeast Asian Bank by assets with a 50% share in its native Singapore market and an increasing presence across Asia, particularly India and Indonesia. The company has strong exposure to trade flows across Asia along with a growing wealth management business.

Rakuten Bank is the fastest growing digital bank in Japan and well positioned to capitalize on the growing trend to cashless in Japan. The company will benefit from rising yields in Japan as the Bank of Japan is expected to increase interest rates twice this year.

Konami Group is a diversified entertainment giant. The company is the leading game developer and publisher in Japan. We expect it to deliver mid-teens earnings growth over the mid-term.

InterContinental Hotels Group operates an asset-light business model, focusing on franchising and managing hotels across a brand portfolio that includes Holiday Inn, Regent, and Crowne Plaza. With 342,000 rooms and a franchise model that drives high returns, we are positive on the long-term growth of the company.

Roche Holding is uniquely structured with two highly synergistic divisions: Pharmaceuticals and Diagnostics, We expect continued strong sales growth within pharma, and the diagnostics division should accelerate growth to mid-high single digits.

Nomura Research Institute Ltd is Japan’s first private think tank and a premier provider of IT solutions and consulting with a strong presence in Japan’s financial
sector. We expect mid-to-high single-digit revenue growth over the mid-term leading to strong and reliable earnings growth.

Tokyo Electron is a global leader in Semiconductor Production Equipment (SPE). With long-term low double-digit earnings growth driven by a strong backdrop for semiconductors, we remain positive on the outlook for Tokyo Electron.

Addtech sells components and systems across automation, electrification, energy, and industrial markets in Europe. The company has delivered strong low double-digit growth through organic expansion and bolt-on acquisitions. We believe its decentralized model and niche-market focus support attractive long-term prospects.

ALS is a global leader in testing, inspection, and certification services. The company is positioned to benefit from higher mining exploration as gold and metals prices rise. We believe its exposure to commodities and strong M&A pipeline support appealing growth in the current environment.

Daifuku is a leader in materials handling and automated logistics. The company is benefiting from manufacturing reshoring, labour-driven logistics automation, and AI data centre demand. We believe its leadership in semiconductor conveyance and growing services revenue support strong long-term growth.

Rheinmetall is a leading European defense company. Rising defense spending and German stimulus provide a strong tailwind for growth. We believe expanding capacity and the divestment of its auto business will allow the company to focus on its most attractive opportunities.

Boliden is a metals and mining company with operations in politically stable regions. Its smelting business provides stability, while rising demand for metals should support earnings growth. We believe steady operations and expansion of existing mines provide attractive upside.

Italgas is a leading gas distributor in Italy and Greece. The company is rolling out smart meters across its customer base and has expanded into water services and energy efficiency. We believe its core distribution business and new growth areas support attractive long-term prospects.

 A detailed review of each company can be found in the full report per the link above.

 Fixed Income Update

Summary: 

Global equity markets experienced a volatile Q1 2026, marked by strong early momentum that reversed sharply following U.S.-Israel airstrikes on Iran on February 28th. The MSCI World Index declined 3.5% including dividends, while the S&P 500 fell 4.4%. However, Canada and Japan bucked the trend, posting positive returns of 4.0% and 3.6% respectively, driven by energy sector strength and pro-growth corporate governance reforms.

The primary catalyst for market weakness was disruption in the Strait of Hormuz, a critical energy chokepoint handling 21 million barrels of oil daily—20% of global petroleum consumption. Daily tanker traffic plummeted from 130-140 vessels to just 5-10, sending crude prices above $100/barrel. However, a 2-week ceasefire announced April 7th, with Iran agreeing to reopen the Strait, sparked immediate market recovery.

Despite geopolitical headwinds, underlying economic fundamentals remained constructive. The U.S. ISM Composite Index surged above 50 after three years of contraction, signaling manufacturing expansion. Eurozone business activity accelerated to 51.9 in February, marking 14 consecutive months of growth. Japan’s Tankan survey hit its highest level since Q4 2021, reflecting strong business optimism. Corporate earnings revisions turned positive across most regions, and stock market breadth expanded dramatically—over 50% of S&P 500 stocks outperformed the index by March 31st, reversing three years of narrow market leadership.

Historically, geopolitical selloffs prove short-lived, with average recovery times of 112 trading days and median recovery of just 16 days. Following such events, annualized returns typically range 9.0-10.5% over 1, 3, 5, and 10-year periods. We raised cash during Q1 uncertainty but plan to redeploy into high-quality stocks as clarity emerges. The outlook remains cautiously optimistic if Strait disruption resolves quickly, though extended closure could trigger stagflation and further downside.

Read the full article by clicking below.

Summary: 

Q1 2026 proved a pivotal quarter for fixed income investors, delivering modest but positive returns despite significant market volatility. Government bonds outperformed as yields initially drifted lower through February, before geopolitical tensions surrounding Iran military actions and Middle East energy infrastructure attacks triggered a sharp reversal. Canadian benchmark bond yields surged over 50 basis points, with shorter-duration bonds experiencing steeper increases.

The article highlights critical insights for portfolio positioning. The 2-year bond yield (~2.85%-2.90%) currently exceeds the Bank of Canada’s overnight rate of 2.25%, signaling market expectations for rate hikes within 12 months. However, portfolio managers argue this may be premature given weakening domestic economic growth, subdued job creation, and tightening financial conditions. Governor Macklem’s cautious rhetoric suggests the central bank will remain patient, potentially avoiding rate increases in the near term.

Corporate bonds widened spreads during the quarter due to heightened market uncertainty, yet both investment-grade and high-yield bonds delivered positive returns as coupon payments offset yield increases and spread widening. The strategy emphasizes high-quality corporate bonds to capture attractive yields while maintaining flexibility on duration—avoiding longer-term bond commitments until rates become significantly more attractive.

Looking ahead, the portfolio remains cautiously optimistic. With inflation at the Bank of Canada’s 2% target and no recession anticipated, corporate credit quality remains solid. The approach balances steady income generation with risk management, adapting to emerging opportunities while monitoring geopolitical and trade negotiation uncertainties that could reshape the economic landscape.

Read the full article by clicking below.

Summary:

In Q1 2026, markets faced headwinds from geopolitical tensions while economic fundamentals remained resilient. The S&P 500 declined 4.33% in dollar terms, though Canadian investors saw improved returns of -2.84% CAD due to currency depreciation. Meanwhile, the S&P/TSX Composite surged 3.94%, driven by energy sector strength.

The Federal Reserve maintained interest rates at 3.50%-3.75%, signaling no rush to cut rates despite persistent inflation concerns. Fed Chair Jerome Powell emphasized uncertainty regarding Middle East developments, with fewer participants now expecting rate cuts in 2026. Economic projections show modest GDP growth of 2.4% for 2026 and elevated PCE inflation at 2.7%.

Historical analysis suggests current conditions differ fundamentally from 1970s stagflation scenarios. Energy intensity has declined two-thirds since the 1970s, and the U.S. is now a net energy exporter, making the economy far less vulnerable to oil shocks. The Misery Index stands at just 6.8%—near “economic nirvana”—compared to 20%+ during previous crises.

Coincident indicators paint an encouraging picture: GDPNow estimates Q1 GDP growth at 2.0%, retail sales rose 6.9% year-over-year, and credit spreads remain below long-term averages. Earnings growth remains robust, with consensus estimates projecting 19.0% growth in 2026 and 16.8% in 2027.

Portfolio adjustments included reducing gold exposure and increasing energy positions, as gold valuations appear near cyclical peaks while energy offers attractive valuations. New positions in Union Pacific and TJX Companies reflect conviction in durable assets and differentiated business models. The outlook remains constructive, with expectations for a relatively swift conflict resolution supporting market recovery over coming months.

Read the full article by clicking below.

Understanding the Shift from Digital to Physical

The investment landscape is undergoing a profound transformation. For the past decade, investors have favored “asset-light” companies—think software platforms and digital services that require minimal physical infrastructure. But in 2026, this preference is reversing dramatically. The market is now rotating toward “asset-heavy” industries: companies that own tangible infrastructure, physical networks, and hard assets that can’t be easily replicated.

This shift is called the HALO trade (Heavy Assets and Low Obsolescence), and it represents one of the most significant portfolio reallocations in recent memory.

Performance of US Asset Heavy (High Capital Expense to Sales ratio) to Asset Light FTW SPX Stock Indices – Past 6 Months, August 2025 to February 2026

Source: Bloomberg. The above chart shows the outperformance in names that are asset heavy (high capital expense to sales ratio) versus companies that are asset light over the previous 6 months.

Why AI Changed Everything for Software Companies

The catalyst for this change is straightforward: artificial intelligence has fundamentally disrupted the software industry’s competitive advantage.

For decades, software companies enjoyed exceptional profit margins because building quality software required specialized talent, significant time investment, and deep technical expertise. These barriers to entry protected established players like Salesforce, Adobe, and ServiceNow from aggressive competition.

That protection is now gone.

Agentic AI—artificial intelligence systems that can independently write code, manage complex systems, and deploy solutions—has democratized software development. What once took a team of engineers months to build can now be generated by AI in days or weeks. The cost to launch a new software business has plummeted.

This creates a critical problem for established SaaS (Software-as-a-Service) companies: their historically high profit margins are now a target. AI-powered startups can undercut prices, replicate features faster, and compete on terms that were previously impossible. As competition intensifies, those attractive margins will inevitably compress.

The Market’s Response: Repricing SaaS Valuations

Investors are responding rationally to this threat. If software companies face margin compression and increased competition, their long-term profit potential—what analysts call “terminal value”—must be reassessed downward.

This is why we’re seeing valuation multiples compress for software and digital service companies. The market is essentially saying: “We’re less confident in your competitive moat.”

Meanwhile, companies with physical assets—power generation facilities, transportation networks, energy infrastructure, and manufacturing equipment—are gaining favor. Why? Because these assets have inherent protection:

• High replication costs: You can’t easily build a competing power grid or oil refinery
• Long technology cycles: Physical infrastructure remains relevant for decades
• Tangible value: Underground reserves, proprietary equipment, and global networks create genuine scarcity

The Irony: Tech Giants Become Capital-Intensive

Perhaps the most striking development is that the very companies that pioneered the asset-light model—Alphabet, Amazon, and Microsoft—have become the world’s largest capital spenders.

In 2026, these three hyperscalers are expected to invest approximately $500 billion in capital expenditures, representing roughly 32% of their combined sales. They’re building massive data centers, fiber-optic networks, and semiconductor facilities to power AI computing.

The message is clear: Even tech giants recognize that sustainable competitive advantage now requires physical infrastructure.

What This Means for Your Portfolio

The HALO trade reflects a rational reassessment of where value actually resides in the modern economy. Asset-heavy portfolios have significantly outperformed asset-light ones since early 2025, and this trend appears structurally sound.

For investors, this suggests:

1. Diversification matters: Overweight positions in pure-play software may face headwinds
2. Physical assets offer stability: Infrastructure, energy, and industrials provide tangible value protection
3. The digital economy still needs physical foundations: AI and cloud computing require massive physical infrastructure—companies providing that infrastructure benefit from essential, hard-to-replicate assets

The rotation away from SaaS leadership toward physical asset ownership isn’t a temporary market whim. It reflects fundamental economic realities: in an era of abundant digital capacity and AI-driven competition, the assets that matter most are the ones that can’t be easily copied.

Each quarter, our Investment Management teams publish their key observations and portfolio updates across Global Equity and Fixed Income markets. This is a summary of our views for the Fourth Quarter of 2025. You can download the full reports via the links shown below.

KEY OBSERVATIONS

The fourth quarter of 2025 marked a pivotal period for global markets as central banks worldwide delivered their most aggressive easing campaign since the financial crisis, with nine major central banks implementing 32 rate cuts totaling 850 basis points throughout the year. This unprecedented monetary stimulus, combined with ambitious fiscal programs across multiple regions, created a supportive backdrop for equity markets despite elevated valuations and periodic volatility.

Corporate earnings emerged as a key driver of market performance, with the S&P 500 delivering 13.6% year-over-year earnings growth in Q3—well above the 7.9% initially expected. More importantly, earnings strength broadened significantly beyond the technology sector, with 82% of S&P 500 companies exceeding earnings estimates, the highest rate since Q2 2021.

International markets demonstrated notable strength relative to U.S. equities, with Europe and Japan generating total returns of 20.7% and 25.5% respectively for the full year 2025, compared to 17.9% for the S&P 500. This outperformance was supported by significant fiscal stimulus initiatives, including Germany’s unprecedented €1 trillion infrastructure package, Japan’s ¥21.3 trillion spending program, and Canada’s ambitious five-year plan to mobilize roughly $1 trillion in public and private investment. These coordinated fiscal efforts, combined with accommodative monetary policy, are expected to provide sustained economic support through 2026.

Perhaps the key wild card remains the White House, as markets can never fully anticipate political developments. Events such as Liberation Day, which drove markets down nearly 20% from their recent high, were an unwelcome reminder of this uncertainty. That said, presidential approval ratings between 35% and 50% have historically been followed by average market gains of approximately 12.19% over the subsequent year. Seems counterintuitive, but perhaps some unpopular decisions might ultimately be good for the economy and markets.

In summary, the combination of resilient economic growth, positive earnings momentum, and the prospect of further interest rate cuts by the U.S. central bank continues to support our favourable outlook on equities going forward.

NORTH AMERICAN EQUITY UPDATE

Peter Jackson, HBSc, MBA, CFA

Chief Investment Officer

Portfolio Manager, North American Equities

Our overall equity exposure increased modestly from 98% to 99%, while cash declined from 2% to 1% since September 30, 2025. Within equities, U.S. exposure decreased from 57% to 53%, while Canadian equity exposure increased from 41% to 46%. Many client portfolios are invested through our North American plus International Equity strategy, which remains at 80% US/Canada and 20% International equities currently; as a result, the effective weights of U.S. and Canadian equities within total equity allocations are proportionally lower due to exposure to international markets.

In our North American strategy, we established the following positions:

Netflix (NFLX) was added based on conviction that the company can organically grow revenue at a mid-teens rate with earnings per share expanding at roughly twice that pace, driven by scaling of the advertising-supported tier, expansion into live events and gaming, and potential acquisition of Warner Bros.’ valuable IP portfolio.

PulteGroup (PHM) was added this high-quality U.S. homebuilder positioned to benefit from a structural housing shortage of approximately five million units and potential mortgage rate declines, trading at roughly 11x forward earnings with a 7.6% free cash flow yield.

Sprott Uranium Miners ETF (URNM) provides exposure to uranium producers positioned to benefit from an estimated 44-million-pound supply shortfall in 2026 and a cumulative 1.8-billion-pound deficit over the next 20 years as demand accelerates globally.

Shopify (SHOP) is a Canadian e-commerce platform offering comprehensive merchant solutions with high switching costs, recently partnering with OpenAI to enable direct sales through ChatGPT conversations, with revenue having grown 31% annually over the past five years.

A detailed review of each holding can be found in the full report per the link above.

GLOBAL EQUITY UPDATE

Phil D’Iorio, MBA, CFA
Portfolio Manager, Global Equities

Global equity markets demonstrated resilience in Q4 2025, with most developed markets generating positive returns despite periodic volatility. International markets significantly outperformed U.S. equities, with Europe’s Euro Stoxx 600 advancing 6.5% and Japan’s Tokyo Stock Exchange gaining 8.8% during the quarter, compared to 2.7% for the S&P 500. The year 2025 proved particularly strong for international investors, with Europe delivering a total return of 36.8% and Japan 25.5%, substantially ahead of the S&P 500’s 17.9% return.

The outlook for 2026 remains cautiously optimistic, supported by unprecedented monetary easing with 850 basis points of rate cuts from major central banks in 2025, significant fiscal stimulus programs including the U.S. One Big Beautiful Bill Act ($4.5 trillion in tax breaks over a decade), Germany’s €1 trillion infrastructure package, and Japan’s ¥21.3 trillion spending initiative. Corporate earnings momentum has been strong globally, with the percentage of companies beating earnings estimates in Q3 2025 exceeding historical medians across Europe, Japan, and Emerging Markets. The broadening of earnings growth beyond mega-cap technology stocks, combined with accommodative policy support and a capex supercycle led by artificial intelligence investments, creates a favorable environment for global equities despite elevated U.S. valuations and geopolitical uncertainties.

New positions added to the Global Strategy:

Ametek is an American industrial technology company manufacturing advanced electronic instruments and electromechanical devices for mission-critical applications in aerospace, energy, medical equipment, and industrial automation, operating in specialized niche markets with high barriers to entry.

Dollarama is Canada’s largest dollar store chain with over 1,600 domestic locations and growing Latin American presence through 60.1% ownership of Dollarcity, differentiated by broad income appeal, high private label mix, and exclusion of perishable items requiring refrigeration.

JPMorgan Chase is the largest U.S. bank with over $4 trillion in assets, operating as a universal bank with dominant presence across consumer banking, investment banking, and asset management, led by CEO Jamie Dimon’s disciplined risk management and fortress balance sheet approach.

UnitedHealth is a former position that is being re-added to the portfolio following management changes including former CEO Stephen Hemsley’s return to repair operations and reprice unprofitable business lines.

Netflix, PulteGroup, Sprott Uranium Miners ETF, and Shopify are described in the North American Equity section above.

New positions added to the International Strategy:

Hermès International is a renowned French luxury goods company positioned at the top echelon with iconic products like Birkin and Kelly bags, enjoying strong pricing power through exclusivity, high direct-to-consumer mix, vertical integration, and family control ensuring strategic consistency.

Orix is a major Japanese diversified financial services group transforming from leasing and corporate finance into an alternative asset manager focused on fee-related earnings, well-positioned to capitalize on succession opportunities in Japan’s mid-market under new CEO leadership.

Pan Pacific International is a Japanese retail holding company operating Don Quijote and other discount formats using a treasure hunt model with store manager autonomy, expanding its discount model and private label penetration across the Asia-Pacific region.

TE Connectivity is a global industrial technology leader providing connectivity and sensor solutions for automotive, networking, and industrial applications, benefiting from secular trends in datacenter capex, defense spending, renewable energy, and factory automation.

 A detailed review of each company can be found in the full report per the link above.

Your Fixed Income Portfolio: What Happened in Q4 2025 and What It Means for You

Your fixed income investments delivered mixed but overall positive results in the fourth quarter.

While government bonds faced some headwinds, corporate bonds performed well—a trend we expect to continue into 2026.

Here’s what drove these results and how we’re positioning your portfolio going forward.

Global stock markets generated strong gains during the fourth quarter of 2025 with most of the major developed market regions delivering positive returns. The key factors that drove performance included interest rate cuts from global central banks, strong corporate earnings, and economic resilience across major global economic regions. One of the key trends during the fourth quarter was the underperformance of U.S. stocks relative to international stocks. In the U.S., the S&P 500 generated a total return of +2.7% despite multiple selloffs in the technology sector that sent the overall market into negative territory in October and November. Performance was much stronger across many international markets with Europe and Japan generating total returns of +6.5% and +8.8%, respectively, as seen in the chart below.

During the fourth quarter, the S&P500 total return was +2.65% in U.S. dollars. Adjusting for currency, the S&P500 returned +1.17% in Canadian dollars, as the Canadian dollar appreciated 1.02 cents during the quarter to $0.7286. The TSX total return was +6.25% in the fourth quarter.

After two interest rate cuts in the U.S. in September and October, the Federal Reserve cut rates by another 25 basis points (0.25%) for the third time in December 2025. The December cut was generally viewed as a hawkish cut, meaning the Fed was viewed as cautious about additional cuts as the Federal Open Market Committee (FOMC) appeared divided, with six of the 19 members favouring no cut. Fortunately, four of the six who favoured no cut are not currently voting members. Still, two members dissented, which can sometimes be associated with turning points in policy decision-making.

This division may reflect the significant shift in the economic outlook for 2026 in the FOMC’s Summary of Economic Projections (SEP) (Exhibit 1). The outlook for real GDP was revised higher to 2.3% from 1.8% in the September projections. A positive takeaway from the SEP was the downshift in the inflation outlook. PCE inflation (the Feds preferred measure) is expected to decline to 2.4% in 2026 from 2.9% in 2025, an improvement from the September forecast of 2.6% for 2026. The SEP also shows inflation falling further to 2.1% in 2027, close to the Feds 2% target, as the one-time transitory tariff impacts roll off. The forecast for the unemployment rate in 2026 was unchanged at 4.4% from the September SEP. Overall, the stronger growth, lower inflation, and relatively low unemployment forecast are not a bad way to start 2026 all while interest rates could still come down somewhat as the December SEP continues to project another rate cut in each of 2026 and 2027.

April was a tense month, beginning with the Liberation Day announcement by the US President on April 2. The proposed tariffs were broader, deeper higher than most analysts’ expectated.

The Treasury Bond market reacted strongly (a recap stated it “went into convulsions”). The 10-Year Treasury Bond yield rose 64 basis points in two days, a major move for a market where high single-digit moves in a day are more common. Rising bond yields mean falling bond prices. Treasurys lost more than 5% in value in one week.

It was the most volatility experienced in the fixed income markets since the pandemic shock in March 2020.
As a result, tariff proposals were quickly put on hold on April 9th by the US Administration. Over the ensuing weeks a seeming détente settled over the market as the rhetoric cooled somewhat (with the occasional notable hiccup) and investors grasped the impact of a world with tariffs in place.