On Balance:
The Asset Mix Committee – September 2025

Decision by Committee (September 12, 2025)

• The AMC¹ trimmed the Canadian Equity weight that had passively increased due to relative performance and added to Fixed Income allocations that had passively decreased.
• Within Global Equity, the AMC decided to reduce the allocation to growth-oriented U.S. Equity and Global Equity and added to more value-oriented U.S. Equity and Emerging Markets Equity allocations.
• The AMC remains comfortable with a bias toward Equity in its asset mix, against expectations that monetary policy easing and greater clarity on trade policy will mitigate the likelihood of a material downturn in the global economy and financial markets.
• That said, elevated valuations in a still uncertain environment do suggest reason for caution that led to decisions to trim more growth-oriented exposures.
• The AMC’s allocations remain overweight Equity with a bias toward Global quality growth strategies. Fixed Income allocations are concentrated in core Canadian bonds.

There are some indications in the “hard” data that economic momentum has slowed, though it remained positive, in the months since the Asset Mix Committee (AMC) last formally met in June, as the impact of tariffs and their related policy uncertainty has restrained activity. More recent “soft” survey-based data, however, have shown a marginal improvement as there has been greater, albeit still very limited, clarity on what trade policies are likely to be in place following the August 1, 2025, deadline imposed by the White House.

As well, there are growing expectations that the policy easing cycle is likely to resume in North America. Central banks appear to be shifting from a “reactive” approach to setting policy to a more “proactive” slant, as concerns about economic slack move to the forefront.

Accordingly, growth expectations for this year and next have continued to move higher from their lows in April (albeit still below the assumed rates that prevailed at the outset of the year), and the estimated probability of an imminent downturn has ebbed.

At the same time, inflation expectations appear to have come off of recent peaks and are not anticipated to become unanchored, though forecasts are for price pressures to remain sticky at rates above central bank targets for the foreseeable future.

Earnings momentum has similarly improved, and expectations have broadly been revised higher, supporting further positive performance of risk assets.

Looking out to the months ahead, the AMC does not see a catalyst for market momentum to be materially derailed. The new bias at the U.S. Federal Reserve suggests room to move away from the current restrictive stance even in the face of positive economic news, while negative developments are likely to be met with expectations of more cuts sooner — both of which could prove constructive backdrops for markets.

At the same time, there is cause for some caution. Recent market performance has pushed valuations higher, which could set up for some pullback, especially in those more expensive growth-focused segments of the market. Still, such an environment could prove relatively positive for those other areas of the market that have underperformed the U.S.-centric Artificial Intelligence (AI) trade.

As such, the AMC decided to trim exposures to some allocations that are more levered to these segments of the market. These weights were redeployed to more value-oriented U.S. equity as well as Emerging Markets Equity — for the latter, it was deemed that economic fundamentals are showing signs of turning for the better, while the relative valuations versus Developed Markets appear attractive, and the asset class stands to benefit from an environment where global interest rates move lower and the U.S. dollar broadly depreciates.

As well, the decision was made to trim exposure to more growth-oriented Canadian Equity, which has seen its weight passively rise in recent months. The weights were re-allocated to core Canadian bonds that, conversely, saw their allocation passively decline since June.

The AMC’s strategic allocations remain overweight Equity with a bias toward Global quality growth strategies. Fixed Income allocations are concentrated in Canadian bonds. The AMC will continue to monitor economic and market developments closely and stands ready to tactically exploit opportunities that may present themselves.

Asset Class Returns (as at September 12, 2025)

Asset Mix Committee Summary Views²

Growth Asset Allocation

Conservative Asset Allocation

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¹ Guardian’s Asset Mix Committee consists of investment professionals and asset class specialists, and is charged with overseeing the development and management of multiasset
investment portfolios, specifically addressing asset allocation and areas for advice or communication to such clients as it relates to the makeup of their portfolio.
² These Asset Allocations represent the Asset Mix Committee’s tactical views given their assessment of market conditions and performance expectations.
³ Benchmark=portfolio strategic asset allocation.
⁴ Figures may not add up due to rounding.

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Published: September 12, 2025