Monthly portfolio brief

Seeing clearly amid blurry headline flurry

What you need to know

• January brought a flurry of headlines, with news related to tariffs, trade agreements, geopolitics, and central bank policy challenging the market's resilience.
• Markets remained largely unfazed, with some segments—cyclical stock asset classes, as well as materials and energy sectors—delivering solid gains.
• U.S. tech has weakened, but broader market leadership is taking shape, supportive of a diversified portfolio approach.
• Build your path with clarity. Define well-balanced, strategic targets and maintain portfolio alignment to plan your future with confidence.
• Be timely, but with discipline—consider opportunities domestically and across global markets to avoid over-dependence on any single country or sector.

Portfolio tip

Active portfolio management can help enhance return potential, but take a measured approach to help manage risks. Consider overweighting multiple asset classes so you don't become too dependent on the performance of any single theme or factor. 

Where have we been?

January's flurry of headlines tested the market's resilience, but markets showed little sign of distraction. Rounds of geopolitical uncertainty, renewed tariff threats from the U.S. administration and ongoing trade negotiations had investors weighing potential impacts from shifting global relationships. Central bank developments also commanded attention, including fresh monetary policy decisions—the Bank of Canada choose to hold rates steady—and the presidential nomination of Kevin Warsh as the next U.S. Federal Reserve chair.

Despite the pressure from headlines, markets remained largely unfazed, gaining support from corporate earnings reports and signs of global economic momentum. With interest rates ticking higher in some regions outside Canada, bonds returns were mixed, leaving stocks to outperform. Strength from relatively cyclical stock asset classes—Canadian small- and mid-cap and emerging-market stocks—provided the greatest contribution to well-diversified portfolios as market leadership continued broadening beyond U.S. mega-cap tech.

U.S. tech weakens, but strength elsewhere reinforces a key theme: broadening market leadership. Multiple U.S. tech giants reported earnings in January, which drew mixed market reactions. While longer-term growth drivers remain intact, investors were left questioning capital expenditure plans and current stock valuations within the sector—uncertainty that has persisted in recent months.

Notably, technology sector performance has diverged across regions. The U.S. large-cap tech sector dropped about 2% in January and 6% over three months, in U.S. dollar terms, causing the asset class to be a laggard relative to other stock alternatives. Conversely, the technology sector within the emerging-market stocks asset class rose around 18% over both periods, partially due to a draw toward broader tech opportunities outside the U.S, helping the overall asset class become the top performer.

Elsewhere, the Bloomberg Commodity Index—a basket of energy, metal and agricultural products—returned over 9% last month, approaching its full-year 2025 gain of around 10%. Higher commodity prices helped propel the materials and energy sectors across domestic and international markets, further underscoring the potential for leadership beyond U.S. tech. With the materials and energy sectors being two of the largest in Canadian stock markets, their strength has driven the outperformance of Canadian stocks over other equity asset classes. 

Recent commodity strength has been led by precious metals, such as gold and silver, alongside a spike in energy prices amid heightened geopolitical tensions. Though, precious metals fell precipitously following the Fed chair announcement, paring back some earlier gains across commodities and materials.

What do we recommend going forward?

Build a path with clarity amid the blur of headline flurry. Regardless of the potential for headlines to distract markets, your financial goals should remain the foundation of your investment decisions. To define a clear path, we suggest talking through this disciplined process with your financial advisor:

1. Define your goal-focused, well-diversified investment strategy. Use your risk tolerance, risk capacity, and financial goals to determine an appropriate mix between stocks and bonds for your circumstances. Our strategic asset allocation guidance below can then help shape broadly diversified target allocations to guide your path and plan your future with confidence.
2. Rebalance to maintain your portfolio's alignment with your plan. Given the meaningful, yet uneven, outperformance of stocks over bonds, now may be an important time to rebalance by trimming positions that have become too overweight. Ensuring your portfolio hasn't drifted too far from your target allocations helps maintain diversification, avoid performance surprises, and uphold the reliability in the plan you've laid out for your goals.
3. Maintain appropriate risk and return expectations. Over the long term, we expect the annual return for stock asset classes to average 7%-9%, with fixed-income asset classes falling into the 4%-7% range, which further highlights the strength of recent market gains.
   
   But markets fluctuate, and so do investment portfolios, even if smoothed by diversification. Therefore, don't let potential pullbacks surprise you, particularly following a strong multi-year period for stocks. Maintain perspective by viewing short-term fluctuations as part of the journey toward your longer-term goals, particularly if your portfolio is aligned with your investment strategy.

Be timely, but with discipline—consider overweight positions in multiple stock asset classes and sectors to avoid over-dependence on any single investment or theme. While we recommend using your strategic target allocations as the starting point for your portfolio, we believe now is an opportune time to lean further into stocks, underweighting bonds.

While periodic pullbacks may occur, we expect stocks to have an edge over bonds this year due to:

• A fiscal boost from across regions,
• Lagging impacts from central bank rate cuts, with some banks potentially cutting further later this year,
• Broad corporate earnings growth,
• Solid global economic momentum, and
• Additional tailwinds from tech-related investment and infrastructure buildout.

We believe this set of conditions opens a range of investment opportunities across global markets, as has already been demonstrated in 2026, given the shifts in market leadership. We expect the broadening theme to continue unfolding over the course of the year, which we believe supports a diversified approach to managing a portfolio's active positioning (allocations that are overweight or underweight when compared to a portfolio's strategic targets).

Therefore, instead of holding an outsized overweight position in any single investment or theme in your portfolio, we suggest taking a more measured approach by expanding your opportunity set—consider overweighting multiple stock asset classes and sectors to capture broad opportunities.

Given the macroeconomic conditions, we favour relatively cyclical asset classes, such as small- and mid-cap stocks in developed overseas and U.S. markets, as well as emerging-market stocks, particularly given their valuations when compared with global large-cap stocks. International stocks have also benefited from strong momentum recently, which we believe could continue, and can help manage currency risks.

Although we recommend neutral allocations to Canadian stock asset classes, we continue to recommend overweight positions in Canadian energy, materials, and industrials sectors, which offer exposure to ongoing energy and metal demand, supportive economic activity and/or attractive valuations.

We also believe U.S. large-cap stocks remain attractive, despite their elevated valuations, given their exposure to tech and the potential for above-trend economic growth in the U.S. Overweighting a mix of consumer discretionary, health care, and industrials sectors in the U.S. may also help your portfolio benefit from tech tailwinds and the increasingly supportive policy backdrop.

 We're here for you

Defining well-balanced, strategic targets and maintaining portfolio alignment can help build and execute a goal-focused plan with clarity and confidence, helping to navigate headline flurry that can create feelings of blur. Active portfolio management can be beneficial, but we suggest a measured approach. Talk with your financial advisor about building timely investment opportunities into your portfolio while upholding the reliability of the plan you've laid out for your goals.

If you don’t have a financial advisor, we invite you to meet with an Edward Jones financial advisor to build a clear, consistent focus on your financial goals into your portfolio—no matter the potential blur created by flurries of headlines.

Strategic portfolio guidance

Defining your strategic investment allocations helps to keep your portfolio aligned with your risk and return objectives, and we recommend taking a diversified approach. Our long-term strategic asset allocation guidance represents our view of balanced diversification for the fixed-income and equity portions of a well-diversified portfolio, based on our outlook for the economy and markets over the next 30 years. The exact weightings (neutral weights) to each asset class will depend on the broad allocation to equity and fixed-income investments that most closely aligns with your comfort with risk and financial goals. 

Diversification does not ensure a profit or protect against loss in a declining market.

Opportunistic portfolio guidance

Our opportunistic portfolio guidance represents our timely investment advice based on current market conditions and a shorter-term outlook. We believe incorporating this guidance into a well-diversified portfolio may enhance your potential for greater returns without taking on unintentional risks, helping to keep your portfolio aligned with your risk and return objectives. We recommend first considering our opportunistic asset allocation guidance to capture opportunities across asset classes. We then recommend considering opportunistic equity sector and Canadian investment-grade bond guidance for more supplemental portfolio positioning, if appropriate.