The third quarter gave investors no shortage of reasons to feel uneasy.

Trade tensions escalated. Interest rates moved higher. Geopolitical conflicts continued to dominate headlines. Markets spent much of the quarter reacting to uncertainty, and many investors were left wondering what might come next.

When we build portfolios, we do so with the understanding that uncertainty is not an exception to the investing experience. It is a normal part of it. Our focus is not on predicting every headline, but on positioning portfolios that can navigate a wide range of outcomes. That discipline guided our decisions throughout the third quarter.

 

Portfolio Positioning: Actions We Took

Equity Allocation: Positioning for Resilience

In late August, we made several targeted adjustments to the equity allocation. These were not dramatic changes, but rather thoughtful refinements designed to improve resilience while maintaining long-term growth potential.

We increased exposure to investments that have historically demonstrated greater stability during periods of uncertainty, including:

  • Income-generating covered option strategies
  • Low-volatility Canadian and global equities
  • Berkshire Hathaway, a diversified business with a long history of disciplined capital allocation

At the same time, we reduced exposure to several areas that had performed exceptionally well and where we felt it was prudent to lock in a portion of gains:

  • Technology and innovation-focused strategies
  • Energy holdings
  • Mining-related investments
  • Digital assets

The result was a portfolio positioned somewhat more defensively, without abandoning opportunities for future growth.

Digital Assets: Conviction and Discipline

Earlier this year, we established a meaningful position in digital assets after identifying what we believed was a compelling long-term opportunity.

The position experienced significant volatility during the first half of the year, but our investment thesis remained intact. During the third quarter, digital assets recovered strongly, generating approximately +50% returns and becoming one of the largest contributors to portfolio performance.

As the position appreciated, we took the opportunity to rebalance and reduce the allocation. The proceeds were redeployed into more defensive areas of the portfolio.

This disciplined approach remains central to our process: establish positions with conviction, allow successful investments to work, and rebalance when risk and reward become less favourable.

Fixed Income Allocation: Sometimes the Right Move Is No Move

No changes were made to the fixed income allocation during the quarter.

Given the prevailing environment, we were comfortable with existing positioning, which includes short-duration Canadian bonds, senior loans, alternative income strategies, and flexible fixed income mandates.

In our view, the portfolio remained well-positioned to balance income generation, diversification, and capital preservation.

Understanding the Environment

Trade Tensions Continue to Weigh on Canada

Trade tensions between Canada and the United States intensified during the quarter, creating additional challenges for both businesses and consumers.

Canadian retaliatory tariffs took effect in September after trade negotiations stalled, contributing to slower economic activity and increased uncertainty for companies considering future investments.

Current forecasts suggest Canada’s economy may grow at less than 1% through the remainder of the year. At the same time, inflation remains elevated, leaving the Bank of Canada with difficult decisions as it attempts to balance economic growth and price stability.

While the outlook remains uncertain, our focus remains on building portfolios capable of navigating multiple scenarios rather than relying on any single economic forecast.

Higher Interest Rates Return to the Conversation

The U.S. Federal Reserve raised interest rates during the quarter and signaled that additional increases remain possible.

Higher borrowing costs present challenges for households and businesses, but they also create opportunities for investors. Fixed income markets continue to offer some of the most attractive yields available in years, making bonds and income-oriented strategies increasingly valuable components of diversified portfolios.

Energy Markets Remain Elevated

Geopolitical developments near critical global shipping routes kept oil prices elevated throughout much of the quarter.

For Canada, higher energy prices create both opportunities and challenges. While energy producers can benefit from stronger commodity prices, consumers and businesses often face increased costs.

Our energy exposure contributed positively during the quarter, though we modestly reduced the position as part of our broader rebalancing efforts.

Looking Ahead

Fixed Allocation: More Defensive, More Global

We are actively evaluating new fixed income opportunities with two primary objectives:

  • Reducing overall credit risk
  • Expanding diversification beyond Canada and the U.S. dollar

Areas of interest include global bond markets, shorter-duration income strategies, and select opportunities in local-currency emerging market debt.

In today’s rate environment, we believe investors can achieve attractive yields while being increasingly selective about the risks they assume.

Energy: Constructive but Selective

We remain constructive on energy in the near term given ongoing geopolitical uncertainty and constrained global supply.

At the same time, we recognize that a combination of conflict resolution and increased production could place pressure on prices over the longer term.

We will continue to monitor developments closely and adjust exposure as conditions evolve.

Digital Assets: Staying Invested, Staying Vigilant

Digital assets remain an important position within the portfolio.

We continue to see supportive fundamentals and improving investor sentiment. However, we remain mindful that volatility is a defining characteristic of this asset class.

Should market conditions change materially, we will not hesitate to rebalance further and manage exposure accordingly.

Beyond Investments

Periods like these are a reminder that long-term financial success is driven by more than investment performance alone.

Tax planning, retirement income strategies, estate planning, insurance reviews, and wealth transfer discussions all play important roles in preserving and growing family wealth.

If there have been significant changes in your personal, family, or business circumstances, we encourage you to reach out so we can ensure your financial plan remains aligned with your goals.

A Final Word

The third quarter tested investor confidence, but tested confidence does not mean a broken plan.

Throughout the quarter, we remained focused on managing risk, preserving flexibility, and capitalizing on opportunities where we saw compelling value. Portfolio adjustments were made deliberately, not reactively, and always with long-term objectives in mind.

We are not in the business of predicting the future. We are in the business of building portfolios designed to withstand it.

Thank you for your continued trust.

 

As always, if you have questions about your portfolio, your financial plan, or any aspect of your family’s financial future, we welcome the conversation.

 

Many of our client relationships begin through introductions from existing clients. If you know someone who may benefit from a second opinion or a more personalized approach to wealth management, we would be pleased to speak with them.