Q1 2026 Fund Commentary

Commentary and opinions are provided by TD Greystone Managed Investments Inc..

Market commentary

Markets had a volatile start to 2026, with turbulence in both fixed income and equity markets driven by the escalation of conflict in the Middle East. The disruption to global oil supply sent energy prices higher as markets tried to assess the effects and duration of the conflict. U.S. and global equities declined, while Canadian equities posted positive returns, partly because of energy sector exposure. Canadian fixed income experienced modestly positive returns through the first quarter of 2026.

Performance

Selection in international equities contributed to the Fund’s performance during the quarter. The Fund’s international equity allocation contributed to performance through positive security selection within that segment. Asset allocation from overweight exposure to Canadian equities also contributed to performance.

U.S. equities detracted from the Fund’s performance through both selection and asset allocation. Security selection in U.S. equities lagged, most notably in the information technology sector. Security selection among Canadian equities also detracted from performance, particularly in the industrials sector.

Portfolio activity

The sub-advisor increased the Fund’s allocation to international equities because of relatively attractive valuations compared to the U.S. and improving fundamentals. The sub-advisor modestly reduced the Fund’s overweight position in Canadian equities to diversify equity exposure, as upside potential may not be as strong as in 2025. The sub-advisor also reduced the allocation to fixed income, as the asset class ranked less favourably against equities from a risk-reward perspective.

Outlook

The sub-advisor is taking a probabilistic approach to reviewing the situation in the Middle East, considering scenarios ranging from de-escalation to prolonged conflict to a recessionary environment. Based on this assessment, the sub-advisor hasn’t made material changes to the strategic positioning of equities, and the Fund remains moderately overweight in equities. The sub-advisor reduced the duration underweight in fixed income, as the sub-advisor believes the bar for additional interest-rate increases in Canada is relatively high and that the level of interest-rate increases being priced into the market may not come to pass. Canada entered this period with weakening inflation momentum, particularly in housing, and domestic economic growth was already fragile. The sub-advisor is monitoring the situation closely and may adjust portfolio positioning should incoming data diverge from the current outlook.