August 2026

 

Introduction

Enclosed in this edition of the Portfolio Managers’ Notes, we are pleased to share BMO Private Wealth’s latest global markets commentary, providing an update on equity markets and insights from our strategist. We have also included a report on CN Railway, a model portfolio holding that recently released their second quarter results.

In the Wealth Management section, you will find a summary guide on tax strategies that investors can utilize to optimize after tax income. As we head back into the fall school season, we have also included an article on RESPs and some options that are available if you have unused RESP savings. We encourage clients who have not yet completed their 2026 contributions to registered plans are encouraged to proceed as soon as funds permit.

We hope you have had an enjoyable and relaxing summer. As always, please remember that we are here to help should you have any questions or wish to review your investment portfolio or financial plan.

 

Market Research

BMO Nesbitt Burns Global Commentary

New and Renewed Feuds

Jawboning (noun): the use of spoken persuasion

– Merriam-Webster Dictionary

 

July saw capital markets react to conflict, discord and feuds: all the way from war in the Middle East to the return of U.S. tariff threats and a family feud at the U.S. Federal Reserve.

Each situation elicited a generally negative response from the markets. However, in the grand scheme, the setbacks for stocks and bonds are modest and understandable.

Price action across global equity markets was mixed. Some markets that posted the strongest earlier-year returns (Japan, Nasdaq and emerging markets) briefly entered correction territory (down more than 10% from recent peak to trough). Nevertheless, they still top the charts for the year. In many markets, including the S&P 500 and S&P/TSX indices, declines from their peaks are merely mild, low-single-digit percentages, which is consistent with a healthy test rather than a breakdown.

In some areas, the pullbacks represent constructive rotations between sectors; in others, they are important tests and displays of discipline. Elsewhere, they reflect a cleansing of over-exuberance. We don’t view July’s red ink as a harbinger of doom or the makings of a peak for this bull market. Rather, we see it as a pause that can refresh.

Despite the list of concerns, the structural trends supporting the economy and asset prices remain intact. The resilience of global growth and financial markets has been tested repeatedly. Our view that the backdrop remains sound is reinforced by how the markets navigated July’s hurdles.


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CN Railway : CNR-TSX

Better-Than-Expected Q2/26 & Guidance Raised; Maintaining Outperform

 

Bottom Line:

CNR delivered better-than-expected Q2/26 results with strong incremental margins (high 60%) as network performance underpinned solid operating leverage. While the guidance raise was expected, together with better Q2/26 results, it underpinned the 3% increase in our forward estimates. Agreements with UNP extend network reach and should at the very least enable CNR to extend length of haul on some of the existing traffic. We are raising our target price to $195 and maintaining our Outperform rating.


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Wealth Management

The smart investor’s guide to reducing taxes and growing wealth

A smart tax plan doesn’t just maximize your registered accounts, it structures your finances in a way that optimizes every dollar you earn on the road to retirement – and beyond. It uses a range of financial strategies – from income splitting to trust structures to estate planning – to ensure your wealth grows in the most tax-efficient way possible.


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When your child’s path changes: Options for unused RESP savings

Plans change. A child may take a gap year, choose an apprenticeship, start working, or decide post‑secondary isn’t the right next step – at least not yet. If you’ve been saving through a Registered Education Savings Plan (RESP), the good news is you still have choices. The right approach depends on what you’re withdrawing (contributions vs. grants vs. growth), whether the beneficiary is enrolled in qualifying post secondary institution, and your broader family plan.


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Contribution Reminder for your RRSP, TFSA and RESP Accounts

Maximizing the value of your registered plans by making annual contributions to your Registered Retirement Savings Plan (“RRSP”), Tax-Free Savings Account (“TFSA”), and Registered Education Savings Plan (“RESP”) is an important wealth planning strategy. By making your annual contribution(s) early in the year, you’ll benefit from the tax-sheltered growth all year long.

The RRSP contribution amount for 2026 is the lesser of $33,810 or 18% of your 2025 earned income.

TFSA contribution amount for 2026 is $7,000 or cumulative of $109,000 if you have never contributed to a TFSA account.

The CRA attributes the problem to delays in processing TFSA annual information returns due to unexpected system issues, with no clear timeline for resolution.

The RESP is an excellent way to save for post secondary education for your children. A contribution of $2,500 to the RESP leads to a combined 30% in government matching savings grants.