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Welcome to Soundbites, weekly insights on market trends and investment strategies, brought to you by Investment Executive and sponsored by Canada Life. For today’s Soundbites, we’re talking about the case for investing in Canada with Lisa Conroy, fundamental equity product specialist with Connor, Clark & Lunn Investment Management. We talked about technology and names she likes. And we started by asking if the TSX is likely to repeat this year what it did last year: outperform the S&P 500.

Lisa Conroy (LC): It’s worth spending a minute on the magnitude of outperformance last year in 2025. The TSX was up 33% relative to the S&P 500 in Canadian dollars. It delivered a 12% return. For Canada, that was its best return since 2009, top decile over the last 50 years. Despite all the trade uncertainty that played out in the first half of the year, global rate cuts as well as really strong commodity prices drove the Canadian market higher. Our view is that we are heading into a global demand for power generation, for electrification, as well as AI infrastructure, providing that structural demand for many commodities that are well represented in the Canadian index, including uranium, natural gas, as well as copper. Canada’s equity market is really well positioned to benefit. And then you layer on a few other pieces. One, we’ve seen the U.S. trade policy be a catalyst for the Canadian government to fix a lot of its broken fiscal policies and bring a pro-business agenda to the Canadian economy, which will be a strong support. Our equity markets remain significantly cheaper than the U.S., despite similar earnings growth forecasts. And so that should also be a support. And then, finally, if you are a Canadian investing in the U.S., it cost you five percentage points last year. And we do expect that currency impact to continue to be a headwind for Canadian investors. And when you put all these together, we do believe Canadian equities should continue to outperform the U.S.

The outlook for gold

LC: Last year, 2025, was the strongest year for year for gold prices since 1979. As we look at the historical drivers of gold prices, many are still flashing green. We expect central banks to continue to diversify away from U.S. assets, U.S. T-bills, and into gold. The Federal Reserve should continue to cut interest rates. That lowers the opportunity cost for investors to hold gold. Debasement trends are also supporting gold prices. We expect U.S. fiscal risk to continue to drive investors away from U.S. assets. And gold has been a key beneficiary of that shift. And then finally, inflation. We expect deglobalization, protectionist policies to put upward pressure on inflation. And gold is a store of value that typically does well in environments of elevated inflation. As we think about positioning and opportunities within Canada’s gold companies, we are most excited about Kinross Gold, Agnico Eagle, and Iamgold. Those would be some of our top picks within the space.

Canadian tech names

LC: As we think about positioning within the Canadian technology space, we are underweight IT services, as well as software companies. AI doesn’t get rid of software, but it does make it much harder for software companies to make money, because the work software used to charge for becomes cheaper, bundled together or it’s done automatically. Similarly, IT services is at risk due to generative AI. And we will likely see further pricing pressure in that business. In Canada, that means we’re underweight Constellation Software, as well as CGI, which is an IT services company. Where we are excited and where we are overweight is more around the AI infrastructure and the technology companies that provide hardware. Celestica is a great example of this in the Canadian market. They manufacture and design the servers and routers that go into the data centres. There continues to be a significant backlog of demand for these hardware items and we expect Celestica’s fundamentals to remain in place. We are also excited about a smaller cap company called Kraken Robotics. It is one of our larger overweights in the technology space. Kraken develops and manufactures batteries and sonar technology that allows companies and individuals to explore the depths of the ocean. It very much fits into the defense spending theme. That type of differentiated technology exposure is something in our portfolio we’re very excited about.

And finally, what’s the bottom line on Canadian equities in 2026?

LC: After a decade dominated by U.S. technology leadership, a regime shift is underway as the investment backdrop broadens. Canada’s equity market is uniquely aligned with the next wave of global investment, offering attractive valuations, currency stability, differentiated sector exposure and meaningful leverage to rising demand for commodities. With a structurally favourable environment for active management, Canadian equities deserve renewed and potentially increased allocation within global portfolios. Given the regime shift that is underway and how the investment backdrop is broadening, I am the most excited I’ve ever been about the outlook for Canadian equities.

Well, those are today’s Soundbites, brought you by Investment Executive and sponsored by Canada Life. Our thanks again to Lisa Conroy of Connor, Clark & Lunn Investment Management. Visit us at investmentexecutive.com, where you can sign up for our a.m. newsletter and never miss another Soundbite. Thanks for listening.

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