How portfolios are adapting to a more volatile world: Insights from Ilan Kolet - April 6, 2026

Uncertainty driven by supply shocks

Today’s volatility is being shaped less by weakening demand and more by disruption on the supply side. Ongoing conflict in the Middle East and constraints around the Strait of Hormuz have tightened global energy markets, feeding inflation and adding pressure across both equity and bond markets. Ilan emphasized that while markets often seek clarity on timing and resolution, the duration of supply shocks is difficult to predict with confidence. Rather than reacting to headlines, the team focuses on how inflation and growth may evolve over the medium to long term and what that means for portfolio positioning.

A renewed view on Canadian equities

One of the most meaningful portfolio shifts discussed was Canada. After maintaining an underweight position for more than a decade, the Global Asset Allocation team began adding back Canadian equities last year and is now overweight for the first time in many years. This shift reflects the structure of the Canadian market. Approximately 38 percent of Canadian equities are tied to resources and energy, giving the market direct sensitivity to commodities and inflation. In an environment shaped by supply constraints and rising input costs, that exposure has become increasingly relevant. Ilan noted that asset allocation decisions are always made in relative terms, weighing Canada against opportunities across global equities, fixed income and alternative assets.

Commodities and a shifting policy backdrop

Canada’s role as a reliable commodity exporter has taken on renewed importance amid global disruption. Demand for energy and natural resources continues to support the market during periods of inflation pressure. The team also sees signs that the fiscal and regulatory environment for resource development in Canada has improved compared with the prior decade. While progress remains uneven, this backdrop has informed a more constructive view toward the traditional drivers of Canadian growth.

Currency positioning as an active decision

Currency exposure is a meaningful contributor to multi‑asset returns. Over the past year, the team reduced its overweight to the U.S. dollar to zero and now holds a modest overweight to the Canadian dollar. This shift reflects changing views on U.S. policy volatility and concern around central bank independence. For diversified portfolios, currency is treated as an active component of both risk and return rather than a passive byproduct of asset allocation.

Rethinking the traditional 60-40 portfolio

While the 60-40 framework remains familiar, Ilan argued that the traditional, static version is no longer sufficient. A set‑and‑forget approach lacks the flexibility needed in today’s environment. The Global Asset Allocation team instead focuses on what it describes as a balanced fund of the future. This approach emphasizes deliberate manager selection, diversification across styles and asset classes and the ability to adjust positioning as conditions change. Recent portfolio evolution has included measured allocations to liquid alternatives and private commercial real estate, each added following extensive research.

Inflation, rates and disciplined decision‑making

When assessing monetary policy, Ilan highlighted the value of simplicity. Inflation and unemployment remain the primary indicators guiding central bank decisions. While inflation has eased from prior peaks, it remains persistent, particularly when supply‑driven pressures feed through transportation, food and services. This reinforces the importance of patience and data‑driven decision‑making when managing portfolios through uncertain environments.

Conclusion: Discipline and flexibility in an uncertain market