GRS 2026 Market update webinar highlights: Canada's resource advantage takes center stage as global economy rewires

Sun Life Group Retirement Services hosted its annual Market Update webinar, bringing together leading economic and investment experts to discuss Canada's evolving economic landscape and global investment opportunities. The discussion examined how trade tensions, artificial intelligence, and shifting global dynamics are reshaping investment strategies for plan sponsors and their members in an increasingly fragmented world.

Speakers

• Frances Donald - Senior Vice-President and Chief Economist, Royal Bank of Canada
• Christine Tan - Assistant Vice-President, Portfolio Management, Sun Life Global Investments
• Jennifer Martin - Vice-President, Global Equities, T. Rowe Price Group, Inc.
• Angela Maitland - Investment Solutions Executive, Sun Life Group Retirement Services (Moderator)

You can watch the recording here

Canada's resilience

Navigating trade tensions and achieving better-than-expected outcomes

Frances Donald highlighted Canada's surprising economic resilience over the past year, noting higher jobs growth than the United States despite ongoing trade tensions.

While RBC forecasts modest 1.1% GDP growth for Canada in 2026—admittedly weak growth—this represents the best of several potential scenarios modeled after President Trump's tariff announcement on February 1, 2025. The worst-case scenario had projected a three-year recession with 10% unemployment, making the current trajectory a significant win against expectations.

The US-Canada trade war turned out to be surprisingly narrow but deep, affecting primarily four sectors: steel, automobile manufacturing, aluminum, and lumber. Despite tensions, 90% of trade to the United States remains tariff-free under The Canada-United States-Mexico Agreement (CUSMA).

Renegotiation of the USMCA in 2026 will be an area of focus, despite the agreement’s expiration being in 2036.

The fiction of the "average Canadian" experience

There is not a single economic narrative across Canada. Alberta is projected to grow at 2.5 times the national average, benefiting from high energy prices, while Ontario and Quebec will grow below the national rate. This regional divergence means the "average Canadian experience" is largely fictional—what matters is where you live and work.

Similarly, the economic impact varies dramatically by demographics. Unemployment for Canadians under 25 stands at 13.7% compared to 5.8% for those over 25. The consumer story is also split: the top 20% of Canadians pulled back spending to pay down mortgages, while the bottom 20% cut discretionary spending and food purchases.

Canada's strategic positioning: From overlooked to essential

The resource advantage in a constrained world

All three panelists emphasized Canada's emerging position as a critical supplier in a resource-constrained world. Christine Tan noted that Canada holds the world's largest potash reserves, the third-largest oil reserves, 15% of global rare earth elements, and the highest water per capita globally. These resources are becoming increasingly strategic as the world prioritizes energy security, food security, critical minerals for AI and defense.

Frances Donald observed that for the first time in her career, international investors from Europe to Asia are actively asking about Canadian investment opportunities. This shift from Canada being somewhat overlooked to actively sought after represents a fundamental change in global investor sentiment

The multi-year transition challenge: Government must lead first

Donald emphasized that capitalizing on these advantages requires multi-year infrastructure projects with minimum 3+ year timelines, and potentially extending to 5-15 years for many initiatives. This necessitates government leadership initially to take on risk that private companies cannot manage given long investment horizons and current regulatory uncertainty.

The challenge will be maintaining optimism about the country while the data disappoints in the short term: In 2026, Canada is still effectively a slow growing economy with huge amounts of long-term upside.

Investment strategy: When benchmarks bend

Concentrated markets and the case for active management

Christine Tan addressed the growing challenge of benchmark fragility in highly concentrated markets. While passive investing offers low-cost access, it now carries significant benchmark risk due to market concentration. The investment landscape has shifted—passive is no longer necessarily low risk; it now represents concentrated benchmark risk.

SLGI's approach uses a core-plus-satellite strategy: low-cost passive exposure where appropriate, combined with active management in concentrated areas, supplemented by alternative investments. The firm has been increasing allocations to real assets, recognizing the growing infrastructure opportunity pool as developed countries commit to significant spending.

The new equilibrium: Higher rates, higher inflation, greater dispersion

Jennifer O’Hara Martin from T. Rowe Price emphasized that the investment landscape has shifted to a "new equilibrium" characterized by higher rates and higher inflation, contrasting sharply with the post-financial crisis period of low rates and low inflation.

This environment benefits different types of companies—in 2025, US markets favored growth momentum while international markets rewarded value momentum.

Maitland noted that five of the best-performing stocks globally in 2025 were Canadian companies, highlighting how active management can capture opportunities across styles and geographies. Country labels are becoming less useful than identifying companies with local dominance, balance sheet strength, and exposure to favorable secular trends.

AI and the transformation of global capital flows

The persistence and broadening of artificial intelligence investment

There is strong conviction about the transformational and persistent nature of AI investment. O’Hara Martin described the hyperscalers - major tech companies- as unregulated monopolies that now face the prospect of spending to maintain competitive positions. She expects this dynamic to persist for years because the alternative—stopping or reducing spending—means losing monopoly-like status.

Tangible assets command premium as AI targets inefficiency

O’Hara Martin observed that tangible assets are commanding a premium—including industrials, energy producers, mining companies, utilities, and semiconductor equipment companies. These companies that build, extract, and manufacture are generating real alpha in portfolios.

Meanwhile, she noted that "AI is a heat-seeking missile looking for dead weight loss," systematically targeting software and platform companies. This represents a fundamental shift in where value accrues in the economy, with tangible asset producers and manufacturers gaining at the expense of pure software plays vulnerable to AI-driven disruption.

Emerging markets: Rewiring the global economy

The rise of middle powers and intra-emerging market trade

Christine Tan characterized the global economic transformation as "rewiring" rather than "deglobalizing." Emerging markets have evolved from "toddlers" (purely export-oriented) to "teenagers" (stronger domestic bases with more good days than bad).

The beneficiaries of this rewiring include: Canada as a provider of raw materials; countries embedded in supply chains as "China plus one" alternatives (Southeast Asia, India, Mexico); and sectors like ports, logistics, and AI infrastructure.

Implications for plan sponsors and members

Building resilient portfolios for multiple market regimes

Panellists emphasized that plan sponsors should focus on creating resilient portfolios designed for multiple market regimes, not just current conditions. Most members don't want a complicated menu but need defaults and core lineups that can weather various market environments.

The panel consensus supported moving beyond simple cost minimization toward better risk-adjusted outcomes through cycles and during periods of volatility. This requires diversifying alpha drivers through intentional combinations of passive and active management. Active equity remains important in a world of higher cost of capital and more divergent outcomes. The key is providing liquid, low-cost exposure to active strategies that can capitalize on market dispersion and secular trends while maintaining simplicity for plan members.

Questions? We’re here to help.

Please contact your Group Retirement Services Representative.