From a commodity cycle perspective, we believe that we are in the early stages of an investment phase which should result in higher commodity returns than exhibited in the last 10-15 years. We further believe we are currently in the later stages of a business cycle. Demand concerns, reflecting worries about a looming recession, have been partially responsible for the weakness exhibited in commodity prices through the first half of 2023. In the coming years, we anticipate returns to outperform our long-term assumption as demand rebounds and supply constraints become more obvious, leading to what we call a "commodity super-cycle"

A commodities super-cycle can be described as a period where commodity supplies fail to keep up with demand, resulting in tighter inventories, and consistent and sustained price increases – a favourable environment for positive commodity investment returns. There are two ingredients required for a commodity super-cycle: a generational demand shock and an extended period of underinvestment in supply. Today, we believe we have both.

Super-cycles historically have been driven by both robust demand and constrained supply and typically last 8-12 years. The strong returns on global commodities we experienced in 2022 have led many to believe that this may be the beginning of a new commodity super-cycle. At this juncture we feel that after spending the better part of a decade in a bear market, commodity prices are likely in the early stages of a super-cycle.

To take advantage of what we feel will is the beginning of a commodity super cycle, TDAM recently launched the TD Alternative Commodities Pool (The Pool). The Pool offers more diversified exposure to commodities than single commodity funds such as gold or silver and can be a great complement for balanced portfolios, with an innovative approach that seeks to achieve capital appreciation with low correlation to equity and fixed income markets. The Asset Allocation Team at TDAM is constantly monitoring the impact of global events to help inform our investment decisions - which is unique in the marketplace compared to the broadly used passive, systematic, or indexing approaches used by other funds with similar objectives.

In summary, we see the allocation to commodities improving portfolio risk adjusted returns through time, especially in environments where inflation is elevated. Commodities can provide inflation protection, afford low correlation and positive expected returns over time. Moreover, we believe that we are likely entering an environment where commodity returns exceed our long- term assumptions and anticipate inflation to be more volatile than in recent history, which would make the benefit of adding commodities even more pronounced.

The information contained herein has been provided by TD Asset Management Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.

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