Canada is having a moment—and not just the kind that gets shared on social media. With the unveiling of the 2025 Federal Budget, the country has quietly positioned itself as one of the most compelling investment destinations in the world. Think of it as Canada’s investment renaissance: a blend of fiscal discipline, strategic spending, and old-fashioned stability at a time when global markets are anything but predictable. 

From multi-billion-dollar commitments to infrastructure and defense to stabilizing federal bond issuance, the country is sending a clear message for 2026 and beyond: Canada is open for business, open for innovation, and open for long-term growth.

Fiscal Discipline Meets Future-Focused Growth

The backbone of this renewed opportunity is Canada’s disciplined, and surprisingly ambitious, budget strategy. With $280 billion in planned capital spending through 2029, including $115 billion for infrastructure and $110 billion for productivity initiatives¹, Canada is betting big on its own future.

Combine that with declining deficit-to-GDP ratios and one of the most stable debt profiles in the G7, and you get a rare environment where long-term public investment doesn’t come at the cost of fiscal health. Investors, especially those who are weary of policy noise in other markets, are taking notice.

Fixed Income Steps Into the Spotlight

If there’s one asset class stealing the show in Canada right now, it’s fixed income. Yields on Canadian investment-grade bonds are sitting at multi-decade highs, giving income-focused investors a chance to earn meaningful returns without stretching for risk.

Historically, Canadian core bonds have offered powerful protection during equity market turbulence. Over the past 50 years, they’ve delivered a roughly 90% “hit rate” in cushioning equity pullbacks². Even though this relationship briefly broke down in 2022 due to unusual pandemic-era inflation dynamics, long-term expectations remain anchored, and the diversification benefits of fixed income appear to be back.

The 2025 Budget reinforces this strength by keeping net bond issuance steady, avoiding a flood of new supply that could push yields higher and disrupt market stability. The result? Attractive yields without added volatility - a rare gift for today’s fixed income investor.

Equities: Hidden Value in Plain Sight

While U.S. equities continue to dominate headlines, Canadian stocks are quietly offering some of the most compelling valuations in developed markets. The S&P/TSX Composite Index still trades at a discount relative to the S&P 500, even as it reaches record highs.

Several tailwinds are pushing Canada into the spotlight:

• A surge in capital projects tied to infrastructure, critical minerals, and energy transition
• A supportive monetary backdrop as the Bank of Canada adopts a more dovish stance
• Strong global demand for commodities, including gold, uranium, and base metals

Investors may increasingly view Canada’s sector mix, energy, materials and financials, as the perfect complement to the technology-heavy U.S. landscape.

Major Projects: Powering the Next Growth Wave

Canada’s role in global megatrends is becoming hard to ignore. Uranium for nuclear energy, critical minerals for batteries and AI infrastructure, and liquefied natural gas (LNG) for a shifting global energy matrix all point to a country uniquely positioned to benefit from long-term structural demand.

Sector impacts include:

• Industrials & defense: poised to grow amid record infrastructure spending
• Banks: stable capital ratios and increased financing opportunities
• Energy: supported by new tax measures and expansion projects
• Materials: riding commodity tailwinds with renewed vigor

For investors, this means a market with broad, diversified upside potential.

For investors seeking resilience without sacrificing return potential, Canada checks many boxes:

• Attractive valuations across equities
• High-quality fixed income options with strong historical protection
• Powerful policy support driving long-term growth initiatives
• Deep resource strength fueling global supply chains
• Diverse investment vehicles, from bonds to alternatives
• Stability amid volatility, backed by disciplined fiscal policy

Trade, Stability, and the North American Advantage

Canada continues to benefit from its place inside North America’s durable trade ecosystem, a “fortress” that has remained resilient despite rising tariffs elsewhere. Low effective tariff rates and a strategy to reduce interprovincial trade barriers further support long-term competitiveness.

Even risks, like slower growth or global trade uncertainty, are mitigated by strong corporate balance sheets, supportive government policy, and a fiscal anchor rooted in prudence.

Why Canada Deserves a Spot in Today’s Portfolios

The 2025 Federal Budget doesn’t just outline a plan; it signals a moment. And for investors willing to look north, Canada’s next chapter may be its most compelling yet.

Canada offers a rare combination of stability and opportunity. And with decades of experience navigating Canada’s equity, fixed income and alternatives markets, TD Asset Management Inc. (TDAM) brings deep insight, rigorous research, and disciplined risk management to help investors capture these opportunities with confidence. From core Canadian bonds to diversified equity strategies across energy, materials, financials, and alternative investments segments like infrastructure and commodities, TDAM’s breadth of expertise positions investors to benefit from Canada’s investment renaissance.

¹ Government of Canada - Canada Strong Budget 2025, November 4, 2025.

² Bloomberg Finance L.P. As of June 30, 2025.

For Canadian institutional investors only.

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