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Published: April 1, 2026

April Highlights
 

  • Canada’s equity market is supported by a large Energy sector poised to benefit from tighter oil markets, alongside well‑capitalized Financials offering attractive dividends and buybacks—supporting a modest overweight stance despite potentially slower growth
  • Commodities have strengthened due to supply disruptions—especially in energy, natural gas, and industrial inputs—reinforcing their role as a diversifier and geopolitical hedge in portfolios
  • Bond yields are expected to remain elevated amid geopolitical and commodity‑driven inflation risks, supporting income generation, with short‑ to mid‑term investment‑grade corporates favoured over longer duration bonds

Core Asset Class Allocations

  • Equities:

    Modest Overweight Overall

     

    Following a strong 2025, global equity markets have weakened in the first quarter of 2026 amid concerns that higher energy prices, driven by heightened geopolitical risks, could weigh on consumers and economic growth. While volatility may persist, we remain overweight equities, supported by earnings growth, and pro‑business government policies.

  • Fixed Income:

    Modest Underweight Overall

     

    Despite the softening of domestic economic conditions, the Bank of Canada (the BoC) has adopted a neutral, balanced stance on monetary policy amid ongoing heightened geopolitical tensions. We expect all global bonds, including Canadian bonds, to be driven by commodity market developments in the near term. This will mean that bond yields, and in return, income, will remain elevated over the next 12 to 18 months.

  • Alternatives:

    Modest Overweight Overall

     

    We believe an allocation to alternative assets can benefit diversified portfolios, particularly over the long term. Alternatives can offer inflation protection and attractive absolute returns, while enhancing portfolio stability through diversification and less‑correlated income streams. Recent geopolitical developments have reinforced the role of alternatives as sources of resilience. Given the nature of private assets and the current phase of value adjustment across several markets, we believe this may be an attractive time to increase or consider an allocation to alternative assets.

  • Cash and Equivalents:

    Modest Underweight 

     

    We are underweight cash as in a declining rate environment other asset classes should provide more attractive returns.

  • Canadian Equities

    Modest Overweight

     

  • Canadian economic growth is expected to remain low but positive, as a more pro‑investment federal government helps offset uncertainty around U.S. trade negotiations. Key supports for S&P/TSX Composite Index returns include the large Energy sector, which may benefit from tighter oil markets, and the well‑capitalized Financials sector, which supports attractive dividend yields and share buybacks.

  • U.S. Equities

    Neutral

     

  • U.S. equity returns are supported by earnings growth, tax policies under the One Big Beautiful Bill Act, and the potential for further deregulation. Key headwinds include the market’s premium valuation, concerns around AI‑driven disintermediation in the IT software & services sector, and ongoing geopolitical uncertainty, which has contributed to a recent defensive tilt in the market. However, to date, S&P 500 Index earnings expectations have held up, and valuations have partially reflected these risks.

  • International Equities

    Modest Underweight

     

  • International equities may lag as earnings growth, while positive, remains lower than in other markets. Japanese equities look attractive on a relative basis with momentum building behind corporate reform, but there may be volatility as the Bank of Japan may look to continue raising rates.

  • Emerging Markets

    Neutral

  • Emerging Markets provide exposure to attractively valued  technology companies with strong earnings growth potential. China continues to face challenges in its property sector but has been implementing policies that could help stabilize its economy.

  • Domestic Government Bonds

    Neutral

     

  • Canadian bond yields are expected to remain elevated as investors assess the duration of the Middle East conflict and the impact that disruptions to commodity and global trade flows will have on future global economic growth and inflation.

  • Investment Grade Corporate Credit

    Modest Overweight

     

  • Credit spreads remain tight, supported by strong fundamentals, but rising AI-related spending and mergers and acquisition activity is creating a more challenging supply and demand backdrop. With risk premiums fairly flat across the yield curve, we continue to favour short to mid-term corporate bonds over longer term bonds.

  • Global Bonds-Developed Markets

    Modest Underweight

     

  • Global bond yields are expected to remain elevated as investors assess the duration of heightened geopolitical tensions and the impact that disruptions to commodity and global trade flows will have on future global economic growth and inflation.

  • Global Bonds-Emerging Markets

    Neutral

     

  • Emerging Market local‑currency government bonds have cheapened relative to their developed market counterparts amid broader market volatility. Although yields remain attractive on both a nominal and inflation‑adjusted basis, currency movements are likely to influence total returns as geopolitical uncertainty persists. Careful country selection will be essential to avoid markets where inflationary pressures or political risks could add to volatility.

  • High Yield Credit

    Neutral

     

  • While earnings growth and fundamentals remain supportive, growing uncertainties around private credit and highly leveraged AI-impacted businesses have potential to tighten lending conditions. Overall, we see the risks as balanced in high yield and remain neutral given tight valuations.

  • Commercial Mortgages

    Modest Underweight

     

  • Commercial mortgages continue to provide accretive income while insulating investor returns from the increased volatility in interest rates.

  • Domestic Real Estate

    Modest Underweight

     

  • We believe most value adjustments in Canadian commercial real estate are complete. Office occupancy (especially in Toronto) should improve by 2026 as large users mandate returns to work. Despite U.S. tariff policy volatility, Canada's industrial market remains healthy. Poor condo markets and lower immigration have temporarily pressured residential rental rates in Toronto and Vancouver due to housing shortages.

  • Global Real Estate

    Neutral

     

  • Returns are starting to improve globally. U.S. and Asian Pacific markets have seen the capitalization rate stabilizing, while Europe continues to outperform. New capital raising and significant redemption recissions are also early indicators of the improved sentiment for continued recovery.

  • Infrastructure

    Modest Overweight

     

  • Infrastructure continues to offer stable returns and lower volatility due to its essential long-term nature. The persistent global infrastructure spending gap remains a key investment driver, reinforcing the need for increased investment. Additionally, accelerating trends such as the electrification of industry and the expansion of digital infrastructure are significantly increasing demand for power generation assets, creating compelling investment opportunities.

  • Commodities (Gold, Energy, metals, agriculture)

    Modest Overweight

     

  • Commodities have strengthened amid supply disruptions, particularly in energy, natural gas, and select industrial inputs. Recent gains appear driven more by curtailed supply than excess demand, reinforcing commodities’ role as a portfolio diversifier during periods of geopolitical stress.

  • Private Debt (Universe)

    Modest Underweight

     

  • High credit quality and global diversification provides an income ballast in an uncertain economic environment. Incremental income and potential capital appreciation from interest rate moderation provide upside.

  • Global Private Credit

    Modest Overweight

     

  • Global Private Credit provides premium income through diversified global origination across corporate, real estate, infrastructure, and specialty finance, including TD Securities’ sponsor and middle‑market corporate relationships. TDAM’s robust credit risk infrastructure supports strong governance and disciplined access to attractive risk‑adjusted return opportunities.

  • U.S. Dollar (USD) vs.
    Canadian Dollar (CAD)

    Modest Underweight

     

  • Based on long‑term valuation metrics, the U.S. dollar appears overvalued. Recent U.S. policy has increased uncertainty around trade and fiscal deficits, enhancing the appeal of other developed‑market currencies as diversification tools. Near‑term USD weakness versus the Canadian dollar (CAD), however, may be limited. Canada’s softer growth outlook, ongoing trade negotiations, and renewed safe‑haven demand tied to geopolitical tensions and supply‑chain disruptions could temper CAD strength. While elevated energy prices have offered some support - particularly given CAD’s historical resilience during energy supply shocks - the currency is viewed as broadly fair‑valued and has benefited less than the U.S. dollar from global risk‑off flows.

 

Chair

David Sykes, CFA

Senior Vice President & Chief Investment Officer,
TD Asset Management Inc., (TDAM)

TDAM Asset Allocation

  • Michael Craig, CFA

    Managing Director, Head of Asset Allocation, Derivatives, Commodities and Sustainable Investment, TDAM

  • Anna Castro, CFA

    Managing Director, Head of Retail Asset Allocation, TDAM

TDAM Equities

TDAM Fixed Income

TDAM Private Markets

  • Colin-Lynch

    Managing Director, Head of Private Markets, TDAM

  • Bruce Mackinnon

    Managing Director, Head of Private Debt Research & Origination, TDAM

Epoch

Council Non-Voting Members

  • Brad Simpson

    Chief Wealth Strategist, TD Wealth

  • Sid Vaidya

    U.S. Wealth Investment Strategist, TD Wealth

  • Bryan Lee

    Vice President and Director, Lead of Asset Allocation Client Portfolio Management Team, TDAM

  • Jafer Naqvi

    Managing Director, Head of Client Portfolio Management, TD Asset Management Inc.

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