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Published: March 4, 2026

March Highlights
 

  • Earnings growth, supportive tax policy, and deregulation have underpinned U.S. equities, while premium valuations and AI-related software weakness persist. Broadening earnings growth across sectors is helping to offset risks.
  • Domestic Real Estate: Poor condominium markets and lower immigration have temporarily pressured residential rental rates in Toronto and Vancouver. Office occupancy, especially in Toronto, is improving as return‑to‑office mandates expand. Industrial assets remain healthy despite U.S. tariff volatility.
  • The WAAC is now providing its view on Global Private Credit, believing it offers premium income through diversified global origination across corporate, real estate, and infrastructure assets, supported by TDAM’s strong credit risk framework, disciplined access, and attractive risk‑adjusted return potential.

Core Asset Class Allocations

  • Equities:

    Modest Overweight Overall

     

    Global equity markets have rallied over the past year due to positive earnings trends and artificial intelligence ("AI") investments, which resulted in valuations expanding. While there could be volatility around AI and economic expectations, we remain overweight equities as earnings growth, as well as increasingly pro-business government policies, create a supportive backdrop for markets.

  • Fixed Income:

    Modest Underweight Overall

     

    The Canadian economy remains resilient giving the Bank of Canada ("BoC") cover to be patient in charting the path ahead for monetary policy. We expect Canadian yields to remain steady, and anchor fixed income returns over the next 12 to 18 months.

  • Alternatives:

    Modest Overweight Overall

     

    We believe that an allocation to alternative assets can benefit diversified portfolios especially when implemented over the longterm. Alternative assets can provide inflation protection and attractive absolute returns, while acting as long-term portfolio stabilizers via their diversification benefits and less correlated income streams. Given the nature of private asset classes as well as the present phase of value adjustment in several markets and asset classes, we believe that this may be an attractive time to increase or consider an allocation to alternative assets.

  • Cash and Equivalents:

    Modest Underweight 

     

    We are underweight cash as in a declining rate environment other asset classes should provide more attractive returns.

  • Canadian Equities

    Modest Overweight

     

  • Canadian economic growth is expected to remain low, but positive, as a more pro-investment federal government offsets the uncertainty of trade negotiations with the U.S. The S&P TSX Composite Index (TSX) potential returns are supported by the strong financial position of the Financials and resource sectors and earnings growth expectations.

  • U.S. Equities

    Neutral

     

  • U.S. equity returns are supported by earnings growth, the "One Big Beautiful Bill Act" tax policies, and the potential for further deregulation. The headwind for the U.S. market is its premium valuation and recent weakness in the software & services sectors due to concerns around the long-run impact AI could have on their businesses. However, this is partially offset by the broadening of earnings growth across sectors and market cap size, where valuations are less demanding.

  • International Equities

    Modest Underweight

     

  • International equities may lag as earnings growth, while positive, remains lower than in other markets, and valuations have moved toward the upper end of their historical range. Japanese equities look attractive on a relative basis with momentum building behind corporate reform, but there may be volatility as the Bank of Japan may look to continue raising rates.

  • Emerging Markets

    Neutral

  • Emerging Markets provide exposure to attractively valued  technology companies with strong earnings growth potential. China continues to face challenges in its property sector but has been implementing policies that could help stabilize its economy.

  • Domestic Government Bonds

    Neutral

     

  • Canadian bond yields are expected to remain steady as investors await evidence of promised federal program spending cuts as well as signs of improving domestic business investment.

  • Investment Grade Corporate Credit

    Modest Overweight

     

  • Credit spreads remain tight, supported by strong fundamentals, but rising AI-related spending and mergers and acquisition activity is creating a more challenging supply and demand backdrop. With risk premiums fairly flat across the yield curve, we continue to favour short to mid-term corporate bonds over longer term bonds.

  • Global Bonds-Developed Markets

    Modest Underweight

     

  • We expect political and policy uncertainty to rise across developed markets, which will likely increase bond market volatility. This could pressure long bond yields higher and lead to negative capital returns, although income will likely offset price losses over the next 12 to 18 months.

  • Global Bonds-Emerging Markets

    Neutral

     

  • Emerging Market government bonds denominated in local currencies broadly offer attractive yields on a nominal and inflation-adjusted basis. Unhedged exposure to local currencies are also expected to boost total return outcomes in an environment where the U.S. dollar is stable or declining. However, country selection will be critical to avoid regions where inflation or political risks may be a source of volatility.

  • High Yield Credit

    Neutral

     

  • While earnings growth and fundamentals remain supportive, growing uncertainties around private credit and highly leveraged AI-impacted businesses have potential to tighten lending conditions. Overall, we see the risks as balanced in high yield and remain neutral given tight valuations.

  • Commercial Mortgages

    Modest Underweight

     

  • Commercial mortgages continue to provide accretive income while insulating investor returns from the increased volatility in interest rates.

  • Domestic Real Estate

    Modest Underweight

     

  • We believe most value adjustments in Canadian commercial real estate are complete. Office occupancy (especially in Toronto) should improve by 2026 as large users mandate returns to work. Despite U.S. tariff policy volatility, Canada's industrial market remains healthy. Poor condo markets and lower immigration have temporarily pressured residential rental rates in Toronto and Vancouver due to housing shortages.

  • Global Real Estate

    Neutral

     

  • Returns are starting to improve globally. U.S. and Asian Pacific markets have seen the capitalization rate stabilizing, while Europe continues to outperform. New capital raising and significant redemption recissions are also early indicators of the improved sentiment for continued recovery.

  • Infrastructure

    Modest Overweight

     

  • Infrastructure continues to offer stable returns and lower volatility due to its essential long-term nature. The persistent global infrastructure spending gap remains a key investment driver, reinforcing the need for increased investment. Additionally, accelerating trends such as the electrification of industry and the expansion of digital infrastructure are significantly increasing demand for power generation assets, creating compelling investment opportunities.

  • Commodities (Gold, Energy, metals, agriculture)

    Modest Overweight

     

  • Precious metals remain strong on safe-haven demand, central bank buying, and geopolitical risks. Industrial metals, especially copper, face supply constraints and electrification-driven demand, supporting a bullish bias. Energy markets face headwinds from oversupply and weaker demand but retain upside from geopolitical risks. Agricultural commodities are mixed, as ample crops limit gains. Overall, commodity returns are likely to be uneven through mid-2026 but supported by macroeconomic forces, resource nationalism, and USD foreign exchange dynamics.

  • Private Debt (Universe)

    Modest Underweight

     

  • High credit quality and global diversification provides an income ballast in an uncertain economic environment. Incremental income and potential capital appreciation from interest rate moderation provide upside.

  • Global Private Credit

    Modest Overweight

     

  • Global Private Credit provides premium income through diversified global origination across corporate, real estate, infrastructure, and specialty finance, including TD Securities’ sponsor and middle‑market corporate relationships. TDAM’s robust credit risk infrastructure supports strong governance and disciplined access to attractive risk‑adjusted return opportunities.

  • U.S. Dollar (USD) vs.
    Canadian Dollar (CAD)

    Modest Underweight

     

  • Based on our long-term valuation metrics, the USD is overvalued. Current U.S. policy has led to uncertainty in trade and fiscal deficits. While this has increased the attractiveness of other developed market currencies for diversification, the momentum of USD weakness versus the CAD may moderate near term due to Canada's weaker growth fundamentals and trade negotiation headwinds.

 

Chair

David Sykes, CFA

Senior Vice President & Chief Investment Officer,
TD Asset Management Inc., (TDAM)

TDAM Asset Allocation

  • Michael Craig, CFA

    Managing Director, Head of Asset Allocation, Derivatives, Commodities and Sustainable Investment, TDAM

  • Anna Castro, CFA

    Managing Director, Head of Retail Asset Allocation, TDAM

TDAM Equities

TDAM Fixed Income

TDAM Alternatives

  • Colin-Lynch

    Managing Director, Head of Alternative Investments, TDAM

  • Bruce Mackinnon

    Managing Director, Head of Private Debt Research & Origination, TDAM

Epoch

Council Non-Voting Members

  • Brad Simpson

    Chief Wealth Strategist, TD Wealth

  • Sid Vaidya

    U.S. Wealth Investment Strategist, TD Wealth

  • Bryan Lee

    Vice President and Director, Lead of Asset Allocation Client Portfolio Management Team, TDAM

  • Jafer Naqvi

    Managing Director, Head of Client Portfolio Management, TD Asset Management Inc.

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