Watch our quarterly commentary above featuring Portfolio Manager Mary Lou Miles and Macro Strategist Justin Hahn.
Despite persistent geopolitical tensions and tariff threats, global markets have continued to set new all-time highs. Much of this resilience can be attributed to factors such as trade agreements gradually taking shape, a softer US dollar supporting corporate earnings, and sustained momentum in sectors like artificial intelligence, which is fueling economic optimism. The passage of significant fiscal legislation, including lower corporate taxes, is expected to further stimulate growth, although concerns around government solvency remain part of the broader outlook.
The backdrop of credit agency downgrades of US debt over the past year hasn’t notably shaken investor confidence, as US debt still retains very high quality. Inflation trends have also been relatively contained so far, partly because of prebuying behaviors, though the downward progress has stalled. As a result, the Bank of Canada has taken a pause on rate cuts since March, signaling an expectation of a potential temporary inflation bump if trade issues resolve.
In response to this environment, Genus’ investment team has tactically increased equity exposure to slightly above benchmark levels, while shifting bond portfolios toward spread products, favoring corporate bonds over government issues. The strategy includes leaning more into cyclical sectors like Consumer Discretionary, Communications, and Information Technology, which are positioned to benefit from continued economic expansion.
Geographically, Genus remains overweight in US equities given solid fundamentals and positive market momentum, while holding a neutral stance on Europe, where markets have performed well alongside ongoing government spending and trade progress. Canadian equities have also seen gains, helped by rising gold prices, but economic softness — reflected in rising unemployment nearing 7% — supports a more cautious allocation domestically. Overall, Genus’ approach remains balanced, adaptive, and focused on protecting and growing client portfolios amid an evolving global landscape.
