Monthly portfolio brief

Your portfolio's 2026 resolve starts now: year-end tips

What you need to know

• Continued strength within the materials sector helped Canadian stocks hold the lead in November, while tech- and policy-related uncertainty kept returns muted elsewhere.
• Gains have been solid across stock and bond markets this year, but Canadian and overseas stocks have stolen the spotlight with standout performance.
• Resolve to be purpose-driven in 2026: Anchor to a globally diversified, goal-focused strategy designed to guide you through the year with clarity and discipline.
• Year-end contributions and withdrawals provide a perfect chance to rebalance and opportunistically position your portfolio with greater efficiency.
• Overweighting a mix of stocks in your portfolio can help capture a broad range of global opportunities we anticipate in 2026, given what we believe to be a constructive backdrop. 

Portfolio tip

Planning contributions or withdrawals? Contributing to areas that have become too underweight and/or withdrawing from areas that have become too overweight can help maintain balance with ease.

Where have we been?

Tech- and policy-related uncertainty weighed on markets in November, muting returns. Market volatility spiked last month to its highest level since the tariff-driven selloff in April, as measured by the CBOE Volatility Index, before easing toward month-end. Concerns related to artificial intelligence (AI) and shifting expectations related to monetary policy were largely to blame, weighing on returns. 

The buildout of AI has kept tech in the spotlight in recent years, with growth optimism and solid earnings fueling market gains. But investor sentiment recently soured on questions about the sustainability of the growth, particularly amid potentially lofty expectations and elevated valuations. These concerns pressured tech-heavy areas such as U.S. large-cap and emerging-market equities. 

Easing monetary policy has also provided a tailwind for markets in recent years as central banks cut interest rates, reducing borrowing costs for businesses and consumers. While the U.S. government shutdown has now ended, delayed U.S. economic data, softening labour markets and still-elevated U.S. inflation created a fog of uncertainty around the Federal Reserve's next moves. Interest rate swings further muted returns across stocks and bonds. 

The materials sector powers Canadian market leadership. Ranking as the third-largest sector within large-cap stocks at nearly 16% of the asset class, and the largest within small- and mid-cap stocks at about 27%, the materials sector plays an important role for the Canadian stock market. 

What's more, fueled by lower valuations and exposure to gold mining as the price of gold soars, the performance of the sector has been astonishing. In November alone, materials within Canadian large-cap stocks delivered nearly a 15% return, pushing their 12-month gain to nearly 85%. Even more striking, materials within Canadian small- and mid-cap stocks has surged almost 120% over the past year. 

This impressive rally helped offset the weight of tech- and policy-related headwinds, positioning Canadian stocks for a strong finish in November. With their 30% - 40% year-to-date returns, the two Canadian stock asset classes are on track to finish the year toward the top of the leaderboard. 

International markets have also had strong momentum, revealing the value of spreading risk and capturing broad opportunities. The commonly referenced S&P 500 index has delivered above-average gains over the past year, after bouncing back from nearly dipping into a bear market in April. But international markets outside the U.S. boosted global portfolios more. 

Easing monetary policies, fiscal support and technological breakthroughs have each helped propel overseas developed- and emerging-market stocks, though to varying degrees. All three international stock asset classes have outpaced U.S. stocks by 10% or more so far in 2025. 

While investment-grade bonds have also delivered solid gains this year, international high-yield bonds have stood out with gains greater than 7%—highlighting the value of global allocations within fixed-income portfolios, as well. 

What do we recommend going forward?

Resolve for your portfolio to be purpose-driven in 2026, anchored by a global strategy. 2025 has delivered its share of unsettling headlines, yet markets have proved resilient. As we look ahead toward 2026 and beyond, we see a world of opportunity. Embrace global diversification as the cornerstone of a purpose-driven strategy — one designed to lead you through uncertainty with clarity and discipline. 

Start by discussing your comfort with risk, time horizon and financial goals with your financial advisor. These factors should shape your portfolio's asset allocation targets — beginning with an appropriate mix of stocks and bonds that are aligned with your objectives. 

From there, set diversified targets for stocks of various regions, market capitalizations, and sectors and, if appropriate, for bonds of various regions, maturities, and credit quality. Keep these targets as a focal point of your portfolio to stay purposeful, no matter the surprises 2026 may bring. 

Consider whether year-end financial deadlines provide efficient rebalancing opportunities. As you review your year-end financial checklist, you might identify an opportunity to add to your portfolio or spot the need to make a withdrawal. For example, some investors choose to maximize contributions to a retirement or tax-free savings account or allocate toward education goals. Others may withdraw to satisfy required minimum distributions or support charitable giving. Additionally, tax-loss harvesting may generate proceeds that require reinvestment.

Are you planning a contribution or withdrawal? This may provide the perfect chance to rebalance with efficiency and ease, potentially helping to minimize additional taxes or transaction costs that rebalancing may otherwise cause. Consider contributing to areas that have become too underweight and/or withdrawing from areas that have become too overweight to help maintain a balance aligned with your financial goals. 

Similarly, now may be an important time to consider reducing overweight cash allocations. Given our expectation for additional easing by central banks, reducing overweight cash can help limit reinvestment risk. Consider deploying excess cash into allocations that have become too underweight to help unlock greater long-term return potential and refocus your portfolio on your purpose.

Consider overweighting a mix of stocks to capture a balance of opportunities in your portfolio. The materials sector in Canada and tech sectors across multiple regions have dominated in recent years. However, this outperformance can lead to concentration risk in a portfolio if left unchecked. And looking ahead to 2026, we believe the bigger picture appears constructive, creating a broad set of opportunities. 

In our view, modest fiscal support, easing central-bank policies, ongoing tech innovation, earnings growth and a steady economy provide a solid foundation for stocks to outperform bonds. Additionally, we believe global diversification is critical to building a solid portfolio in 2026, including within overweight stock positions. Therefore, strike a balance by overweighting a mix of stock asset classes. 

Complement Canadian stock allocations with an overweight to overseas stocks. We favour the more economically sensitive asset classes — emerging-market stocks and international developed small- and mid-cap stocks — which have had stronger momentum this year. We believe they can help portfolios tap further into policy tailwinds, technological breakthroughs and relatively compelling valuations more globally.

We also prefer the quality of U.S. stocks, as well as the exposure they provide to tech-related tailwinds alongside other sectors with relatively attractive valuations and catch-up potential, particularly amid the likelihood for deregulation and an improving policy backdrop. Consider overweighting U.S. stocks across a variety of market capitalizations to capture broadening opportunities. 

 We're here for you

Creating a resolve can provide a symbolic fresh start focused on future possibilities. But waiting until the calendar turns to beginning acting could mean missing valuable opportunities. Talk with your financial advisor as you complete your year-end checklist, evaluating the steps you can take now to help prepare your portfolio for a year we expect to offer a wide world of opportunity. 

If you don’t have a financial advisor, we invite you to meet with an Edward Jones financial advisor to talk about some first steps that can help you meet the new year with a purpose-driven, opportunistically positioned portfolio already in motion. 

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.