Executive Summary

Second Quarter

After a rocky start to the year where U.S. equities fell sharply in the first quarter as tariff concerns and the onset of the Iran conflict pushed oil prices higher and unsettled investor sentiment, markets staged a strong rebound in the second quarter as tensions in the Middle East eased. The Canadian S&P/TSX index advanced 6.4% during the quarter, while U.S. markets more than reversed their first quarter losses: the Dow Jones index gained 12.9%, the S&P 500 rose 14.9%, and the Nasdaq surged 21.4%. Lower inflation expectations and strong corporate earnings, particularly an AI-led rebound in semiconductors, drove much of the advance.

The Bank of Canada held its policy rate steady at 2.25%, as widely expected. In the United States, the Federal Reserve also held rates steady, keeping the federal funds rate in a range of 3.50%–3.75%, while continuing to weigh the inflationary risk of higher energy prices against downside risks to growth.

The Model Portfolio increased 7.7% in the second quarter, helped by strong contributions from Palo Alto Networks (initiated earlier in the year) and continued strength in our Canadian bank holdings, while our decision to avoid gold miners also supported relative performance. During the quarter, we initiated a new position in CAE to gain exposure to long-term growth in aviation and defense training. We took advantage of the strength in energy markets and trimmed Suncor at the start of the quarter, the proceeds were used to buy CAE. With the portfolio built to deliver lower volatility, we believe it remains well positioned to provide steady returns and a smoother experience for clients, even as markets navigate ongoing questions around AI-driven valuations.

 

Personal Checklist

  1. Make 2026 RRSP contribution as soon as funds are available. The maximum is 18% of 2025’s earned income to a maximum of $33,810.
  2. Make 2026 $7,000 TFSA contribution as soon as funds are available. The maximum if you have never contributed is $109,000.
  3. Make $2,500 annual RESP contribution per child to benefit from the 30% combined government grants.
  4. Take advantage of the new FHSA if you are looking to buy a house for the first time in the future
  5. Review asset allocation to make sure it is in line with current objectives and risk tolerance and inform us of any special income need for this year.