A quiet end to a strong year

Despite the geopolitical turmoil and fears of stocks being overvalued last year, investors who stayed in the markets were rewarded handsomely. Equities returned well above long-term expectations, thanks mostly to AI’s continued boost to earnings growth and capital investments. And while rate cuts fell slightly short of the aggressive predictions made at the start of the year, they still provided additional tailwinds.

Bond markets also delivered modest returns, since easing inflation concerns allowed both the Bank of Canada and the U.S. Federal Reserve to lower their interest rates, which propped up asset prices across the board.

And then there’s gold, which has continued to shine. After a remarkable 38.2% boom in 2024 (in Canadian dollar terms), gold was up another 57% in 2025. This continued surge was driven by two main factors:

Here’s a brief look at how our different products performed in the last quarter, with more detail on each in the sections below. (For alternative asset investors, we’ll be sending a performance update next month when those figures are available.)

Managed portfolios

As you can see in the chart above, all of our portfolio types performed well this past quarter, right on or above our expectations. Most of the impact was from stocks (especially in our growth-oriented Classic and SRI portfolios) and gold, while bonds were roughly flat. That’s one big benefit of the diversification included in our Managed portfolios. Both the stock allocation and the strategic investment in gold mean that you automatically participated in both rallies.
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​As you may remember, we recently shared two important changes we made to the Managed portfolio allocations early last quarter. Along with reallocating some weight from global equities towards Canadian equities, we also added more return-seeking fixed income investments and U.S. diversification.
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​Clients are already seeing the benefits of both decisions, with Canadian stocks outperforming global developed markets outside of North America by about 2.4% over the quarter, and the newly added Canadian and U.S. bonds each beating Canadian long-duration bonds by 2% to 3%. This is a short period of time for comparison, but it’s promising, and we expect to see continued positive effects on your returns.

Core Bond portfolio

Our Core bond portfolio is designed for investors who are looking for an opportunity to outperform a high-interest savings account while having lower volatility than our stock portfolios. In Q4, the portfolio returned 0.7%, bringing the total returns since inception (July 2024) to 5.6%, for an annualized return of 3.9%. Its yield to maturity, or the expected returns you’d get by holding this particular mix of securities over any time period, is currently 3.2% — roughly 0.7% above the rates for our Money Market Portfolio. This is right in line with our expectations.

Our outlook

With geopolitical tensions still elevated, gold remains a valuable asset in a diversified portfolio, even after considering the rise in pricing over the last few years. Those tensions also mean that any perceived increase in risk raises the likelihood that investors will pull their money from the markets. But as last year proved, trying to time the market by getting out before others do can mean missing out on valuable returns.

As we start 2026, there remains massive opportunity for technical advancements in the AI space, both in terms of growth in the technology itself as well as improved understanding of applicable and practical use cases. However, this is counterbalanced by the already elevated valuations of the big American tech companies, as well as the fact that the market has already priced in strong future sales. Any perceived weakness in realizing those expectations could lead to investor disappointment — and market drawdowns.

Central Banks, particularly in the U.S., will also be in focus in 2026. While Canada appears to be nearing the end of its rate-cutting cycle (with small increases possibly coming this year), the U.S. may have room for further cuts, given that inflation has largely subsided. Plus, the chairman of the Federal Reserve ends his term in May, and markets are intensely concerned that a more lenient chair may allow inflation to resume in force, which is bad for almost all financial assets. Tremors in the U.S. could reverberate through the Canadian economy, causing the need for swift action in response.

Figuring out what comes next is an inherently challenging situation. That’s why, in most cases, the best strategy is patience and diversification. None of us can control what happens in markets or the world, but by investing in a broad basket of assets, we can take steps to ensure we’re on a solid footing no matter what lies ahead.

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