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TD Wealth Perspectives Newsletter: Fall 2026
SECURITIES AND INVESTMENTS | |||
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NOT A DEPOSIT | NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE |
SECURITIES AND INVESTMENTS | |
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NOT A DEPOSIT | NOT FDIC INSURED |
NOT BANK GUARANTEED | MAY LOSE VALUE |
Neal Brandon, CFA
Senior Investment Strategist, TD Wealth Chief Investment Office
The third quarter demonstrated that markets can continue to make progress despite uncertainty. While geopolitical tensions, higher energy prices, and rising interest rates remained in focus, the U.S. economy stayed resilient, supported by healthy consumer spending, a strong labor market, and solid corporate earnings. Although results varied across market segments, major equity indexes generally advanced, reflecting confidence in economic growth and business fundamentals, even as rising bond yields weighed on fixed income markets.
The quarter also reinforced the value of maintaining a long-term perspective. Market swings were driven by shifting interest rate expectations, inflation concerns, and developments in the Middle East, but they also highlighted the importance of staying diversified and focused on financial goals. While uncertainty may persist, we believe a disciplined investment approach remains the most effective way to navigate changing market conditions and participate in future growth opportunities.
In this edition of Perspectives, the TD Wealth Asset Allocation Committee explores how current market themes are influencing portfolio construction and what they may mean for investor positioning. In addition, TD Wealth Strategist Ashley Weeks outlines the key legal and administrative documents families may wish to have in place before a child starts college, helping ensure parents can provide support when medical, financial, or academic matters arise.
Each month, members of the TD Wealth Asset Allocation Committee (WAAC) gather to discuss all things global markets, geopolitics, and the outlook for key asset classes, among other topics. These discussions are often thoughtful, engaging, and highly spirited, and members are united by a common objective: providing strategic portfolio construction insights that inform many of TD Wealth's managed solutions and help investors navigate an evolving investment landscape.
While the WAAC meets to discuss a broad range of topics, in recent meetings, some themes have emerged that warrant a closer look, and that we believe may help investors approach portfolio construction over the next 12 to 18 months.
Earnings Growth Beyond Mega-Cap Technology
As many investors are aware, a relatively small group of companies have been significant drivers of market returns. The Magnificent 7 (Apple Inc., Microsoft Corporation, NVIDIA Corporation, Alphabet Inc., Amazon.com, Inc., Meta Platforms, Inc., and Tesla, Inc.), along with other technology companies in the semiconductor and artificial intelligence (AI) space, have fueled index performance. This has resulted in elevated market concentration, with the Mag-7 alone accounting for more than 30% of the S&P 500 Index's market capitalization.
While mega-cap technology stocks have been major contributors to equity market performance, we've been observing earnings growth broadening beyond these multi-trillion-dollar enterprises. At the same time, earnings revisions have been trending higher across sectors, signaling increasing confidence in corporate profit expectations and a wider base of companies contributing to growth.
Importantly, much of the market's broadening performance has been driven by earnings growth rather than expanding valuations. This suggests that returns are supported more by underlying fundamentals and corporate profitability than by investor enthusiasm alone.
Within the S&P 500 Index, revenue and earnings growth have broadened across most sectors. Notably, year-over-year (YoY) earnings growth has expanded meaningfully in equity markets during the Q2 2026 reporting period. Within the S&P 500 Index, the Energy sector is leading YoY earnings growth, followed by the Communication Services and Consumer Discretionary sectors. While a few sectors continue to lag, the overall picture suggests that market leadership is expanding and creating a healthier, more diversified foundation for future returns (Exhibit 1).
Exhibit 1: YoY Earnings Growth – S&P 500 Index
Source: Bloomberg Finance, L.P. As of June 30, 2026.
In recent months we have seen volatility increasing within semiconductor stocks, offering a useful illustration of this trend. Even as technology shares lagged in both the July and September sell-offs, we have witnessed diversified approaches holding up well, and in some cases continuing to provide positive returns. Expectations for the Energy, Materials and Financials sectors remained constructive alongside those for the Information Technology sector, underscoring a broader and more balanced market environment.
For investors, this evolution is encouraging. While AI and digital innovation remain powerful secular growth themes, we continue to see earnings expand across industries and regions, reinforcing the importance of maintaining a diversified investment approach while focusing on companies with strong fundamentals and sustainable earnings potential.
Higher Bond Yields Are Reinforcing the Role of Fixed Income
While broadening equity market leadership may be dominating the conversation around expanding investment opportunities, we believe fixed income remains an important portfolio diversifier. With yields having moved higher and likely to remain elevated, the WAAC believes fixed income continues to offer an attractive combination of income generation and portfolio stability.
From a valuation perspective, intermediate-term Treasury bonds appear increasingly attractive and are yielding above their 20-year averages (Exhibit 2). Yields remain above the levels relative to our estimates of fair value, and this is particularly evident in the U.S., where elevated nominal and real yields have improved the potential return from adding duration.
Exhibit 2: 10-Year Treasury Bond Yields
Source: Bloomberg Finance, L.P. As of September 30, 2026
Although government deficits and geopolitics remain key considerations for bond yields, capital spending related to AI has also contributed to the recent rise in real yields in part by raising prospects for longer-term economic growth. More importantly, however, inflation expectations have remained stable as investors correctly anticipated that central banks would tighten monetary policy to keep inflation anchored close to their targets. This has helped stabilize yields at historically elevated levels.
On the corporate credit side, spreads remain tight, but sector dispersion has increased compared to last year, creating more security selection opportunities. Overall, bond yields remain attractive, and investors can earn meaningful income from high-quality corporate securities while, in our view, taking on a reasonable level of risk.
After years of suppressed yields, fixed income is once again offering meaningful income and diversification potential. Higher yields and attractive real rates are helping create a more balanced risk-return profile for multi-asset portfolios.
Acknowledging the Risks to the Outlook
While the economic and market backdrop remains constructive, there are several risks we're watching closely. These include elevated equity valuations in certain sectors, higher long-term interest rates and energy prices, questions about the sustainability of the AI investment cycle, trade tensions, and ongoing geopolitical hostilities. We're also mindful of the potential for volatility as growth expectations are reassessed and the environment continues to evolve.
At TD Wealth, our focus remains on managing these risks while identifying opportunities that can emerge during periods of heightened volatility, particularly when valuations and long-term fundamentals become more attractive and potentially dislocated from underlying fundamentals. Identifying and taking advantage of these market dislocations has long been a focus of our investment teams, as we seek to deliver optimal outcomes for investors.
In Closing
Improving market breadth and easing concentration have been an important topic in recent WAAC discussions. A broader range of factors are beginning to drive returns, and our internal measures point to more diverse participation across regions, as well as within asset classes.
AI, Information Technology and data center investment may continue to shape the market narrative for some time. At the same time, the investment opportunity set is becoming broader. Earnings growth is expanding across sectors, and higher bond yields are reinforcing the value of fixed income.
For investors, this growing breadth may represent an important shift. It creates opportunities to build more balanced portfolios that rely less on a concentrated group of companies and instead draw returns from a broader range of sectors and industries. In many ways, market rotations can be a healthy part of the investment cycle. By tempering excess speculation and expanding market leadership, this may help extend the market cycle while supporting more stable returns and reducing portfolio volatility.
Disclosures
The information contained herein has been provided by TD Asset Management Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
The TD Wealth Asset Allocation Committee (WAAC) is comprised of a diverse group of TD investment professionals. The WAAC’s mandate is to issue quarterly market outlooks which provide its concise view of the upcoming market situation for the next six to eighteen months. The WAAC’s guidance is not a guarantee of future results and actual market events may differ materially from those set out expressly or by implication in the WAAC’s quarterly market outlook. The WAAC market outlook is not a substitute for investment advice.
TD Asset Management Inc. manages investment funds that may, from time to time, have indirect exposure to the investment strategies described herein.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Any characteristics, guidelines, constraints or other information provided in this material are representative of the investment strategy and are provided for illustrative purposes only. Any information about holdings, asset allocation, or sector diversification is historical and is not an indication of future performance or any future portfolio composition, which will vary. Portfolio holdings are representative of the strategy, are subject to change at any time and are not a recommendation to buy or sell a security. The securities identified and described do not represent all of the securities purchased, sold or recommended for the portfolio. It should not be assumed that an investment in these securities or sectors was or will be profitable.
Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable. Such expectations and projections may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these deviations. You should avoid placing any reliance on FLS.
Investment strategies and current holdings are subject to change.
TD Asset Management Inc. is a wholly-owned subsidiary of The Toronto-Dominion Bank.
Ashley Weeks
Wealth Strategist
When a student turns 18 and starts college, parents often remain deeply involved: emotionally, financially, and practically. However, a parent's access to information changes when their child becomes a legal adult. Medical providers, universities, banks, landlords, and billing offices may be limited in what they can share or allow a parent to do unless the student has signed the correct authorizations in advance. Use this guide as a conversation starter before classes start.
TD Wealth perspective: Legal readiness is not about reducing a student’s independence, it is about creating clear authority to help quickly if an emergency, administrative issue, or academic concern arises.
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Health Access |
Financial Authority |
Education Records |
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HIPAA authorizations and health care powers of attorney can help parents communicate with providers when needed. |
A durable power of attorney can allow a trusted adult to help with banking, leases, taxes, or urgent paperwork involving finances. |
A FERPA release can permit the school to discuss grades, billing, financial aid, or conduct matters with parents. |
1. Understand What Changes at Age 18
Once a child becomes a legal adult, parents generally no longer have automatic authority to access medical information, speak with school officials about protected education records, or act on the student’s behalf in financial or legal matters. Paying tuition, carrying the student on a family health plan, or claiming the student as a dependent for taxes does not grant full access to protected information. Planning ahead helps the student choose who can help and under what circumstances.
2. Consider a Durable Financial Power of Attorney
A durable financial power of attorney allows a student to name a trusted person (often a parent) to assist with financial, legal, and administrative matters if the student is unavailable or unable to act. This can be useful for tuition issues, apartment leases, bank account problems, insurance paperwork, tax filings, student loan questions, or urgent signatures while the student is away from home or studying abroad. The document can be tailored based on state law and limited in scope. Consultation with an attorney is recommended.
3. Pair HIPAA Authorization with Health Care Decision Authority
A HIPAA authorization gives health care providers permission to share protected health information with named individuals. A health care proxy or medical power of attorney goes further by naming someone to make medical decisions if the student cannot communicate or make decisions independently. Together, these documents may help parents receive timely updates, understand treatment options, and avoid delays during a serious illness, accident, or mental health crisis.
4. Complete the School's FERPA Release
The Family Educational Rights and Privacy Act generally gives college students control over access to their education records. A FERPA release or third-party access form can allow the school to discuss selected categories of information with parents, such as billing, financial aid, registration, grades, housing, conduct, or academic progress. Each institution has its own process, and some forms must be renewed periodically, so families should confirm requirements with the registrar, bursar, financial aid office, and student portal.
5. Build a College Legal Readiness Checklist
- Durable financial power of attorney for banking, leases, tax, insurance, and urgent paperwork
- Health care proxy or medical power of attorney naming a primary and alternate decision-maker
- HIPAA authorization listing the people and providers who may receive health information
- FERPA release or student portal permissions for academic, billing, financial aid, and housing information
- Copies of insurance cards, emergency contacts, campus health information, and local urgent care options
- Secure digital and paper copies shared with the student, parents, and any named agents
6. Make the Conversation Student-Centered
These documents function as a support plan rather than a loss of independence. Students should understand what each document does, who will be named, when authority applies, and how access can be limited or revoked. Ultimately, the adult student controls access to their information and consulting with qualified legal counsel before signing is prudent.
Practical Next Steps
- Ask the student where they want help and where they want privacy.
- Contact the school to identify its FERPA release, parent portal, billing access, and renewal process.
- Meet with an attorney to prepare state-appropriate powers of attorney and health care documents.
- Confirm whether documents should be valid in the student’s home state, school state, or both.
Store signed copies securely and make sure named agents can access them quickly in an emergency
Important Information
This guide is for general educational purposes only and is not a mortgage approval, lending commitment, investment recommendation, or tax or legal advice. Clients should consult the appropriate lending, tax, legal, and financial professionals for guidance specific to their situation.
TD Wealth® is a brand of TD Bank N.A., (TD Bank). Banking, investment, and trust services are available through TD Bank. Securities and investment advisory services are available through TD Private Client Wealth LLC (TDPCW), a US Securities and Exchange Commission registered investment adviser and broker‐dealer and member FINRA/SIPC. Epoch Investment Partners, Inc. (Epoch), a US Securities and Exchange Commission registered investment adviser, provides investment management services to TD Wealth. TD Bank, TDPCW and Epoch are affiliates.
TD Wealth Management Services Inc. (TDWMSI) is a licensed insurance agency that offers insurance products.
The information contained herein is current as of August 1, 2026, and is based on information and sources that are deemed reliable. The information herein is general and educational in nature, and should not be considered financial, retirement, estate planning, legal or tax advice.
TD Bank and its affiliates do not provide legal, tax or accounting advice and the information herein should not be considered legal, tax or accounting advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. TD Bank and its affiliates cannot guarantee that the information herein is accurate, complete, or timely. TD Bank and its affiliates make no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult your attorney or tax professional regarding your specific situation.
Information herein may refer to or be based on certain rules and regulations in effect prior to current legislation and current rules may differ. As always, before making any decisions about your retirement planning or withdrawals, you should consult with your personal tax advisor.
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