Balanced Portfolios: A Market Tug of War and the Discipline to Stay Neutral

But before we get to that, even though we're almost, I guess, halfway through the year, I think it's worth taking a minute just to set the table by looking back at how 2025 unfolded, because I think it will serve us well for the rest of the discussion.

So give us a quick recap of 2025 for the balanced portfolios.

Yeah, sure.

Thanks, Andrew.

I mean, when I reflect on 2025, one of the stories that seemed to stay with us through much of the year was the U.S. administration's unveiling of their new tariff regime.

Looking back, the communication and the implementation of their tariff policies seem pretty chaotic and disjointed.

Maybe I'm putting that kindly.

What it led to is a considerable amount of uncertainty in markets.

So there was worries that tariffs could reignite inflation, concerns that this could be the catalyst for a severe global economic recession, worries that the U.S. may lose its status as a trusted partner and the U.S. dollar could lose its status as a global reserve currency.

So it led to considerable volatility throughout the year, both to the downside as well as the upside.

The way we navigated the environment from a balanced perspective was to stay fairly neutral.

And by that, I mean we kept our equity allocation fairly close to our 60% target.

But in doing so, we did execute what I would call a more meaningful shift out of U.S. equities and reallocated that capital to Canadian equity markets, international and emerging markets.

That decision actually proved to be quite favorable for our balanced portfolio in that each of those regions significantly outperformed the US markets in 2025.

Andrew, you'll also recall from a fixed income standpoint, We introduced our global credit strategy to the portfolio.

And during the year, we incrementally allocated more capital to global credit as the year unfolded.

In the end, this was a calendar year in which cash bonds and equities all posted positive returns.

In fact, it was the third consecutive year in which each major asset class posted positive returns.

the third consecutive year in which total returns for our core balance strategies were well above historical norms.

So it was no question an environment that was quite rewarding to balanced investors.

And I'm happy to share that the growth in balanced portfolios has continued here in the first five months of 2026.

Thanks for the refresher.

I mean, just you and I both know things are moving so fast that sometimes things just from six months ago feel like a lifetime.

So it's some of those things did not politely stay in 2025.

But before we get to that, even though we're almost, I guess, halfway through the year, I think it's worth taking a minute just to set the table by looking back at how 2025 unfolded, because I think it will serve us well for the rest of the discussion.

So give us a quick recap of 2025 for the balanced portfolios.

Yeah, sure.

Thanks, Andrew.

I mean, when I reflect on 2025, one of the stories that seemed to stay with us through much of the year was the U.S. administration's unveiling of their new tariff regime.

Looking back, the communication and the implementation of their tariff policies seem pretty chaotic and disjointed.

Maybe I'm putting that kindly.

What it led to is a considerable amount of uncertainty in markets.

So there was worries that tariffs could reignite inflation, concerns that this could be the catalyst for a severe global economic recession, worries that the U.S. may lose its status as a trusted partner and the U.S. dollar could lose its status as a global reserve currency.

So it led to considerable volatility throughout the year, both to the downside as well as the upside.

The way we navigated the environment from a balanced perspective was to stay fairly neutral.

And by that, I mean we kept our equity allocation fairly close to our 60% target.

But in doing so, we did execute what I would call a more meaningful shift out of U.S. equities and reallocated that capital to Canadian equity markets, international and emerging markets.

That decision actually proved to be quite favorable for our balanced portfolio in that each of those regions significantly outperformed the US markets in 2025.

Andrew, you'll also recall from a fixed income standpoint, We introduced our global credit strategy to the portfolio.

And during the year, we incrementally allocated more capital to global credit as the year unfolded.

In the end, this was a calendar year in which cash bonds and equities all posted positive returns.

In fact, it was the third consecutive year in which each major asset class posted positive returns.

the third consecutive year in which total returns for our core balance strategies were well above historical norms.

So it was no question an environment that was quite rewarding to balanced investors.

And I'm happy to share that the growth in balanced portfolios has continued here in the first five months of 2026.

Thanks for the refresher.

I mean, just you and I both know things are moving so fast that sometimes things just from six months ago feel like a lifetime.

So it's some of those things did not politely stay in 2025.