Bipan Rai

Diversification Driving Growth: Despite the slowest loan growth in decades, Canadian banks delivered nearly 10% revenue growth, with non-interest income (trading and fee-based) now making up 54% of total revenues.

Mixed Core Performance & Cautious Outlook: Capital markets and wealth management were strong, while traditional lending lagged; banks remain cautious on credit risk, increasing provisions for non-impaired loans.

Valuation & Strategy Implications: Robust capital positions support dividends and buybacks, creating rationale for an equal-weight beta exposure such as ZEB. For those with valuation concerns, we suggest covered call strategies like ZWB to smooth returns and limit volatility.

Canada’s latest budget marks a major pivot toward long-term growth, with C$115B in infrastructure spending alongside substantial allocations for defense and housing. Alongside those investments, the Feds are encouraging private sector participation via regulatory streamlining and tax incentives.

There has been a lot of demand for the safe haven of gold in 2025, while global central banks as well as investors in general remain bullish. Yet the precious metal is part of a wider commodities complex that holds several benefits that can aid client portfolios.

There is an important and meaningful difference between the current AI capex boom and the Tech bubble from 25 years ago. That being that the current AI spending boom is largely funded by internal cash flows as opposed to external (debt) financing.

One of the more interesting wrinkles of the current rally in Gold is that it’s been accompanied by an uptick in global ETF holdings of the precious metal. That means retail/​institutional investors are getting in on the fun this time around – which is a bit of a departure from what we saw between late 2022 and early 2024. During that period, retail/​institutional liquidation of Gold was accommodated by central bank buying. Why are retail/​institutional investors more inclined to participate now? Three reasons:

While Quality has had a tough year so far, we expect it to perform going forward. This is largely due to a shifting macro backdrop that favours firms with stable earnings, a still-restrictive Fed monetary policy regime, and exposure to AI.

A variety of factors, from positive correlations between stocks and bonds to improving access via new products and fund structures, have made alternative asset classes increasingly important considerations in allocation decisions. John de Goey, author and portfolio manager at Designed Wealth Management, joins Bipan to discuss his approach to alternatives, and the future of alts in Canadian portfolios. This podcast was recorded live on December 16, 2025.

With attention turning toward capital allocation decisions for next year, Bipan is joined by BMO Global Asset Management CIO Sadiq Adatia to examine key themes poised to shape financial markets, as well as sectors and geographies that could benefit from a constructive macro backdrop or specific strengths. This podcast was recorded live on December 11, 2025.

With the final weeks of trading for 2025 underway, Bipan surveys some key data points shaping markets through year-end and into 2026, while diving into two sectors with tailwinds that could benefit investors through next year. This podcast was recorded live on December 2, 2025.

Hundreds of billions of dollars have been allocated to building out compute capacity in recent months — with hundreds of billions more to come next year. Bipan is joined by Malcolm White, BMO Global Asset Management portfolio manager to discuss sector expectations for 2026 and beyond. This podcast was record live on November 25, 2025. 

The AI capex boom is helping spur equity valuations higher, but prompting worries about a potentially painful market correction. Brent Joyce of BMO Private Wealth, joins Bipan to discuss why this cycle truly is different, as well as the outlook for earnings through next year. This podcast was recorded live on October 23, 2025.

Former Bank of Canada Governor Stephen Poloz joins Bipan to discuss the implications of the fourth industrial revolution now underway, and how Canadian policymakers can respond to seismic shifts to the economy. This podcast was recorded live on October 16, 2025. This podcast was recorded live on October 16, 2025.

A surprisingly hardline stance from Beijing on rare earths exports combined with Trump’s renewed threat of steep import tariffs has swiftly thrust global trade tensions back to the forefront for markets. TD Cowen’s Chris Krueger joins Bipan to discuss where the renewed trade war could go from here — amid an ongoing U.S. government shutdown that could go on for weeks or more. This podcast was recorded live on October 14, 2025.

Central banks have been the biggest source of demand for bullion in recent years, however, that is shifting as new entrants alter the balance of power. Daniel Ghali of TD Securities joins Bipan to discuss current market dynamics, as well as the outlook for silver and other metals. This episode was recorded live on September 30, 2025. 

A new floor price for world oil prices as well as rising forecasts for gold are two among many implications traders are weighing as tensions simmer between Iran, Israel as well as the United States. Bipan is joined by TD Securities strategist Daniel Ghali to discuss what impact the conflict has had on commodity and energy price expectations. This podcast was recorded live on June 24, 2025.

Gold prices have skyrocketed as investors both big and small have poured into the precious metal seeking its relative stability amid ongoing trade uncertainty and market risks. Daniel Ghali, director, commodities strategy at TD Securities joins Bipan Rai, director of ETF strategy for BMO ETFs to discuss who’s behind gold’s big moves and where prices could go as the year progresses. This episode was recorded live on April 8, 2025.

As a shifting economic backdrop fans recession fears in the U.S., is a soft landing still on the table? In this episode, ETF Strategist Bipan Rai, and your host, Erika Toth, analyze the market outlook. They also discuss our third quarter investment strategy reports and portfolio construction across asset classes. Erika Toth is a Director of Institutional and Advisory for Eastern Canada at BMO Global Asset Management (BMO GAM). She is joined on the podcast by Bipan Rai, Head of ETF Strategy, at BMO GAM. The episode was recorded live on Wednesday, August 28, 2024.

In our first ​‘Tax Efficient’ Portfolio, we are following the same fundamental rationale as our ​‘Balanced Portfolio’ with a few caveats. First, we are prioritizing capital gains over income. This means focusing more on discount bonds in the fixed income sleeve of our portfolio while also continuing to prioritize shorter duration products.

As an example, we have removed ZBI and replaced it with ZCDB (BMO Corporate Discount Bond ETF) at a lower weight. We are also increasing the weight of ZDB in this portfolio to 10% (from 5% in our balanced fund).

Second, we are prioritizing Canadian and U.S. underlying holdings over international investments. That means a greater weight for core exposures in ZCN and ZUQ. At the same time, we are removing ZIQ and ZEM.

For the tactical exposures, we have elected to go with a covered call strategy for Tech ZWT (BMO Covered Call Technology ETF) as well as a covered call strategy for Utilities ZWU (BMO Covered Call Utilities ETF). Both allow us to earn tax efficient income in sectors that we think should still continue to perform.

Additionally, both of the aforementioned strategies will help to make up for the relatively lower income that comes with utilizing discount bond ETFs in the fixed income sleeve.

We are also removing our exposure to ZGI (BMO Global Infrastructure Index ETF) and reallocating that to ZLSC (BMO Long Short Canadian Equity ETF).

In the Q3 edition of this report, we were more constructive on our outlook for the U.S. fixed income space relative to Canada. This reflected our view at the time that the market was underpricing the risk of Federal Reserve (Fed) rate cuts in the fall, while the Bank of Canada (BoC) was likely at the end of its cycle.

Fast forward three months, we’ve largely seen this story play out. U.S. rates have outperformed as Canadian dollar (CAD)-U.S. dollar (USD) spreads have tightened aggressively across the curve.

There is a deep contradiction between perception and reality that is currently playing out in the U.S. economic landscape. In many ways, it reminds us of the setting to the famous 1999 movie, The Matrix (a friendly spoiler alert for those that haven’t seen it – skip ahead to the next paragraph). In the movie, the world in which the protagonist wakes up is a simulated reality powered by an engine that most don’t see. This ​“invisible engine” dynamic helps us square the inconsistency between the prevailing narrative of U.S. economic fragility and incoming data that shows resilience.

Despite the recovery in broad risk over the past few months, the underlying issue remains the same. The decades-long integration of global trade — with the United States at the hub — has been permanently disrupted. And unless we see a complete reversal from the Trump administration, the current regime of higher trade barriers is likely here to stay.

What’s more, we also appear to be in the early stages of something more nefarious — a capital war. As congressional members pass the ​“One, Big, Beautifull Bill Act”, a provision like Section 899, even if excluded, should send a reminder to non-U.S. investors that foreign investment is becoming less welcome than it has been in the past.

As the global trade paradigm shifts, countries are reassessing old economic configurations.

Consider, that with the United States retreating from free trade, developed market economies can now expect the contribution from net trade to economic growth to decline in the coming years. Indeed, those same economies will now need to chart a different course as the degree of access to U.S. markets has changed dramatically.

Over the past month, the sectoral theme of note has been the rotation out of cyclicals and into defensives. This has been most evident in the performance of Health Care (up over 9% in November) versus Tech (down 4.4%). While we continue to like staying overweight Health Care, we also want to pay tribute to other sectors that show a favourable revenue profile but are still undervalued.

Q3 2025 earnings have been broadly resilient, with 87% of S&P 500 companies beating earnings per share (EPS) estimates as of October 31. But beneath the strong headline numbers, earnings breadth is narrowing. Markets are increasingly rewarding companies and sectors that meet two critical tests: 1) Turning AI/capex investments into credible gains; 2) Operating in sectors with structural quality (cash flow resilience, healthy balance sheets)

One of the more prominent reasons for why the U.S. Health Care sector has underperformed this year has been top-down policy uncertainty (i.e., tariffs) and what that could potentially mean for margins. But in early October, the Trump administration announced that it had come to an agreement with a large pharmaceutical/​biotech firm (Pfizer) that has flipped sentiment by an appreciable degree.

Analyzing the historical track record of key composite leading indicators provides an understanding of where we are in the current cycle, and contextualizes the expected performance of various areas of the economy.

The end of the year is a special time. The slowing modulation of the markets gives many an analyst time to unplug, which inevitably leads to reflection about what the next year will bring. And as ideas begin to take shape, convictions start to form and a general sense of where the market is headed is reached.

It is almost always a humbling exercise.

For instance, just consider a subset of the important macro/​market events from this year

We’ll acknowledge that ​“infrastructure” doesn’t typically generate the same type of excitement that other areas might. For instance, ​“crypto” sounds mysterious and fun while ​“AI” has the type of buzz you’d associate with something cool and trendy. Going long infrastructure sounds the same as recommending ​“plastics” to someone in the 1960s - it’s boring and safe.

But branding issues aside, boring and safe can often be a good thing in the world of investing.

We’ve been bullish infrastructure for almost a year now. And as part of our own internal review process, we decided to revisit our rationale in this note. Out of the multitude of reasons that we could have picked, there are two compelling ones for why we still feel that investing in infrastructure will remain a compelling play in the years to come.

We recently rewatched the classic film​Raiders of the Lost Ark, and couldn’t help but draw a comparison between market participants expecting the Fed to cut rates aggressively to Indiana Jones running away from the boulder toward safety in the opening scene.

Indeed, if we examine current pricing for the Federal Open Market Committee (FOMC) in the swaps market, there is a 63% chance that the Fed will cut by 25 basis points (bps) at the December meeting. What’s more is that the market expects a gradual easing throughout 2026 to take the Fed funds rate below the 3.0% level by the end of next year (from an effective rate of 3.9% now). Stop counting on your fingers, folks – that equates to four more cuts from here.