INVESTING

The Canadian investment landscape continues to evolve in response to economic shifts, market dynamics, and emerging investor priorities. Drawing from data collected across Canadian investors, businesses, and market intermediaries, this investor trends report reviews insights from the past year and highlights investment trends shaping capital deployment and market participation in 2026.

Executive Summary: Key Findings for Canadian Investors

• Macro Themes: Inflation, productivity trends, and interest rate movements in 2025 influenced investor confidence and capital deployment patterns across sectors. Historical data from the Bank of Canada shows that market volatility and real returns shaped allocation decisions.
• Asset Allocation Shifts: Data from past years indicates a gradual rotation from traditional fixed income toward equities and alternative assets, particularly in technology and clean energy sectors, reflecting changing investor preferences.
• Sector Influence: Technology, clean energy, and infrastructure investment accounted for higher allocation weight among Canadian investors, with Environmental, Social, and Governance (ESG) reporting and sustainability considerations becoming more prominent in corporate disclosures.
• Tax, Accounts, and Regulation: Registered accounts such as Tax-Free Savings Accounts (TFSAs), Registered Retirement Savings Plans (RRSPs), and First Home Savings Accounts (FHSAs) continued to influence portfolio construction, with capital gains treatment and contribution room affecting realized outcomes.
• Behavioural Risks: Survey data highlights overconfidence, performance-chasing, and underestimation of sequence-of-returns risk as common challenges for Canadian investors.
• Digital Tools & Advice Models: Robo advisors, AI-enabled portfolio tools, and scenario simulations gained usage, reflecting a shift toward automation and decision support.
• Scenario-Based Thinking: Stress testing, factor analysis, and multi-scenario evaluation showed relevance for mitigating downside volatility and aligning capital deployment with personal goals.

Macro Backdrop Canadians Care About

Interest Rates, Inflation, and Labour Markets

Canadian investors in recent years have closely monitored interest rates, inflation, and labour market trends, with historical data from the Bank of Canada and Statistics Canada providing context for capital deployment decisions.

• Bank of Canada Rate Path: Data from 2024-2025 shows periods of both rate hikes and pauses. Commentary and surveys suggest that market participants weighed the potential for gradual easing versus maintaining higher rates, affecting borrowing costs for mortgages, guaranteed investment certificate (GIC) yields, bond prices, and equity valuations.
• Inflation Trends: Headline CPI movements indicate some progress toward the 2% target, though services inflation has remained relatively persistent. Past patterns suggest that elevated core inflation can influence both consumer spending and corporate earnings.
• Labour Market: Unemployment rates over the previous year have shown minor increases in certain regions, indicating slight cooling after historically tight conditions. Historical experience suggests that labour market softness can temper wage growth and reduce discretionary spending.
• Investor Implications: Rising or sticky inflation, paired with interest rate shifts, historically influenced decisions around debt management, bond allocation, and equity sector selection, particularly for interest-rate-sensitive sectors.

Currency & Global Context

The Canadian dollar's movements relative to the U.S. dollar and other currencies have influenced portfolio outcomes in past years.

• CAD/USD Dynamics: Historical data shows that interest rate differentials and commodity price swings have driven CAD volatility, impacting returns for Canadian investors holding U.S.-denominated assets.
• Commodity Exposure: Canada's resource-heavy economy means oil, gas, and metals prices have historically affected currency strength, with knock-on effects for cross-border investment returns.
• Global Context: Historical trends in Europe, Asia, and the U.S. show that slowing or fragmented global growth can influence capital flows into Canadian markets, particularly in sectors tied to exports and commodities.

Portfolio Positioning Shifts

Investor choices regarding investment vehicles and factor tilts have evolved in recent years.

• Shift from Mutual Funds to ETFs: Survey and transaction data suggest a continued movement toward ETFs, driven by cost transparency, intra-day liquidity, and potential tax efficiency compared with traditional mutual funds.
• Factor Tilts: Factor-oriented approaches have become more prevalent among Canadian investors. Quality, low-volatility, and dividend-growth exposures have appeared more frequently in portfolios, consistent with past research showing that factor-based allocations can influence risk-adjusted returns over different market cycles.
• Dividend vs. Growth Considerations: Historical patterns show that dividend-focused equities may provide income stability in taxable accounts, while growth-oriented equities often remain favoured in registered accounts like TFSAs and RRSPs, where capital gains deferral or tax-free growth can be leveraged. This allocation behaviour highlights how account type can shape portfolio construction choices without implying any performance expectation.
• Practical Insights: Across both vehicle and factor shifts, past flows illustrate a combination of cost-conscious behaviour, risk management preferences, and tax-aware allocation decisions, reflecting broader investment trends among Canadian investors over the past three years.

Investment Trends: Thematic & Sector Trends

Growth & Innovation Themes

Artificial intelligence and technology have attracted notable attention from Canadian investors in recent years, with adoption levels in enterprises rising steadily. Data from Statista indicates that North American AI adoption in business processes grew by roughly 25% between 2021 and 2023, while Canada-specific investment exposure often occurs through US-listed equities due to liquidity and market capitalization considerations.

Digital infrastructure and cloud computing have also seen expanding allocations, reflecting ongoing demand for scalable IT solutions and remote work enablement. Canadian investors may gain exposure via ETFs and equity funds focusing on technology and cloud services, balancing growth potential with sector-specific volatility.

Healthcare innovation has been another area of focus, partly driven by demographic trends such as an aging population and chronic disease prevalence. According to the Canadian Institute for Health Information, health expenditures increased by approximately 6.1% in 2024, supporting investor interest in healthcare innovation and related equities.

Thematic investing can carry distinctive risk profiles, including concentration risk, higher valuation sensitivity, and lower correlation with broad indices. Historical data shows that while technology- and healthcare-themed funds have contributed positively to growth in certain periods, they may also experience larger drawdowns during market corrections.

Cyclical, Defensive & Domestic Sectors

Energy transition has prompted reconsideration of traditional versus renewable energy exposure. Canada's commodity exposure, including oil, natural gas, and metals, can influence portfolios through macroeconomic cycles. Data from the Canadian Association of Petroleum Producers notes that crude oil and natural gas accounted for nearly 20% of Canada's total exports in 2022, highlighting the country's sensitivity to energy cycles.

Real assets and infrastructure have drawn attention for inflation-protection narratives, particularly given rising construction and materials costs over the past three years. Canadian infrastructure-focused vehicles, including publicly listed REITs and infrastructure ETFs, may provide exposure to domestic and North American markets, with differing Toronto Stock Exchange (TSX) vs. New York Stock Exchange (NYSE) allocations influencing risk and return profiles.

Overall, Canadian investors appear to engage across both growth-oriented themes and cyclical/domestic sectors, with historical data guiding allocation considerations and risk assessments rather than future performance projections.

Account & Tax Behaviours

Registered Account Usage Trends

Canadian investors show varied patterns in using registered accounts. Tax-Free Savings Accounts (TFSAs) have accumulated significant assets since their introduction, yet data from Statistics Canada indicates that contribution room is often underutilized, with many accounts holding cash-heavy balances rather than being fully invested. Some investors, however, have used TFSAs for active investment purposes, reflecting differences in risk tolerance and financial goals.

Registered Retirement Savings Plans (RRSPs) continue to serve as a primary vehicle for retirement savings. Annual contribution behaviour suggests that income-smoothing motives influence allocations, with higher earners often contributing closer to maximum limits, while others leverage tax-deferral opportunities to manage annual tax liabilities. Historical trends from the Canada Revenue Agency (CRA) indicate that RRSP contribution rates have remained relatively stable over the past five years, reflecting consistent participation patterns.

The First Home Savings Account (FHSA), introduced more recently, shows early-stage adoption patterns. Initial data from the Government of Canada points to many accounts being used as short-term saving vehicles, often blending traditional savings behaviour with early investment allocations. Across registered accounts, investors balance between holding cash for liquidity versus deploying capital in equities, ETFs, or other instruments.

Cross-Border & Tax Pitfalls

US dividend withholding tax remains a consideration for Canadian investors. TFSA accounts generally do not recover withheld US taxes, whereas RRSPs can benefit from tax treaty exemptions.

Other tax pitfalls include asset location mistakes, such as holding high-turnover equities in taxable accounts, which can trigger capital gains taxes. Awareness of income versus capital gains treatment varies, and behavioural research indicates that many investors underutilize tax-loss harvesting opportunities, leading to avoidable tax drag. Understanding these patterns provides insight into recurring tax inefficiencies observed in Canadian portfolios.

Risk Perception & Behavioural Shifts

Investor Psychology in 2025

Canadian investors demonstrated a notable preference for holding cash following periods of market volatility. Data from the Investment Funds Institute of Canada (IFIC) suggests that elevated cash balances often emerge after sharp equity drawdowns, reflecting comfort-seeking behaviour. Recency bias also appeared influential, with many respondents overweighting recent market movements when making allocation decisions.

Market timing attempts, while not universally widespread, were observed in surveys of Canadian households. Entry and exit behaviour tended to cluster around macroeconomic headlines, including interest rate announcements and inflation updates, suggesting that short-term news may disproportionately affect decision-making. Research highlights that overreaction to headline data can contribute to inconsistent investment patterns, even among experienced investors.

Emerging Behavioural Themes (Responsible Investments & More)

Home-country bias continued to feature in Canadian portfolios, with domestic equities and fixed income often representing larger-than-global-weighted allocations. This trend aligns with findings from the CFA Institute, which notes persistent home bias across developed markets, including Canada.

Crypto asset participation remained present but concentrated among a small subset of investors. Survey data indicates that involvement often reflects speculative behaviour rather than long-term allocation, with frequent trading and high volatility tolerance being common traits.

Attitudes toward sustainable and ESG investing also showed evolution. Many investors reported interest in aligning portfolios with personal values, yet historical returns and risk considerations remained influential. Data from the Responsible Investment Association (RIA) in Canada highlights a balance between value-driven demand and performance-conscious allocation, reflecting a nuanced approach to responsible investing.

Together, these behavioural patterns suggest that Canadian investors in 2025 balanced risk perception, personal values, and recent market experience when shaping portfolio decisions, with implications for asset allocation, product selection, and engagement with emerging trends.

Digital & Advice Trends

Advice Models & Platforms

Canadian investors continued to diversify how they access investment advice. Surveys from the Canadian Investment Regulatory Organization (CIRO) indicate that both robo-advisors and traditional human advisors maintained substantial usage, reflecting a balance between cost considerations and personalization needs.

Hybrid advice models, which combine automated portfolio management with periodic human guidance, gained attention among investors seeking accountability while maintaining lower fees than full-service models. Trust and behavioural coaching emerged as differentiators for human interaction, particularly during periods of market volatility. Respondents cited the reassurance of having a point of contact to discuss rebalancing, life events, or behavioural tendencies, suggesting that advisory value extends beyond pure investment selection.

Tools, Fees & Self-Directed Investing

Fee sensitivity remained a significant factor for Canadian investors using digital platforms. Data from the Canadian ETF Association highlights that lower management expense ratios (MERs) and flat-fee models continue to influence platform selection.

Demand for enhanced digital tools also grew. Portfolio analytics, scenario-testing capabilities, and AI-driven research were frequently cited in surveys as helpful for decision support and understanding risk exposures. Self-directed investors reported using these features to simulate contributions, tax impacts, and drawdown scenarios, illustrating a shift toward more informed, data-driven investing.

Competition among online brokerages appeared to focus on both feature sets and pricing, with platforms highlighting analytics dashboards, automated alerts, and integrated research feeds. At the same time, some investors reported information overload, suggesting that while digital access may enhance decision-making, too many inputs could increase cognitive load and potentially affect execution quality.

Overall, these trends suggest that digital and hybrid advice models, combined with expanding analytical tools, continued to influence how Canadian investors approached portfolio management, cost considerations, and behavioural support.

Outlook Scenarios for Investor Trends: Bull, Base, and Bear

Base Case

Historical data from Statistics Canada and the Bank of Canada suggest that in prior periods of moderate growth, Canadian investors tended to maintain balanced portfolios across equities, fixed income, and alternative assets. In these scenarios, gradual rate easing following periods of elevated policy rates appeared to support mortgage affordability, bond prices, and moderate equity returns.

Asset allocation shifts in past moderate-growth periods showed increased emphasis on broad diversification, with neither aggressive risk-taking nor full defensive positioning dominating flows. Sector positioning in historical base-case environments often reflected a mix of cyclical and defensive exposure, including energy, financials, and consumer staples, suggesting that investors typically balanced growth and income potential.

Bull Case

In periods of faster disinflation and accelerating earnings, as observed in Canada in the mid-2010s, equities and other risk assets showed relative outperformance. Investors historically increased exposure to growth-oriented and cyclical sectors, including technology, industrials, and consumer discretionary. Capital deployment during such periods often reflected higher allocation to equities with domestic and U.S. exposure, while fixed income positioning shifted toward shorter-duration or yield-sensitive instruments.

Past bull-case environments also saw increased participation in thematic and innovation-driven sectors. Investors frequently accessed clean energy, AI technologies, and healthcare innovation themes, consistent with industry-level growth trends. Behavioural patterns suggested increased risk tolerance and higher willingness to maintain positions during short-term volatility.

Bear Case

Data from prior Canadian recessions and high-inflation episodes indicate that defensive positioning and quality-focused assets tended to outperform. In scenarios of sticky inflation or policy error, longer-duration bonds, high-quality dividend-paying equities, and cash equivalents received relatively more attention.

Diversification and liquidity management were emphasized during such periods. Investors appeared to prioritize holding multiple asset types, including government bonds, money-market instruments, and non-correlated alternatives such as infrastructure, to mitigate downside volatility. Sector exposure generally shifted toward consumer staples, utilities, and defensive healthcare names, while cyclical sectors were reduced relative to historical norms.

These observations illustrate how Canadian investors have responded to differing macroeconomic environments. The scenarios (bull, base, and bear) highlight typical patterns in growth, risk appetite, asset allocation, and sector positioning, without implying specific future outcomes. They provide context for understanding the interplay between macro conditions, investor behaviour, and portfolio implications in prior periods.

Wrapping Up: Investor Confidence and Insights from 2025 Trends

The 2025 investor landscape in Canada reflects a balance between caution and adaptation. Historical data points to continued cash allocation as a comfort measure, even as equities and alternative assets remain part of many portfolios. Asset allocation trends indicate ongoing interest in diversified holdings, with ETFs increasingly used for cost transparency, liquidity, and ease of implementation.

Investor behaviour also shows that risk perception and psychological factors, such as recency bias and home-country preference, continue to influence decisions. Sustainable and thematic investing have gained traction, though past performance highlights sector concentration and volatility considerations.

Registered accounts, such as TFSA, RRSP, and FHSA, continue to shape portfolio outcomes. Cross-border tax considerations, currency exposure, and contribution patterns are reflected in historical results, emphasizing the importance of understanding account rules and tax implications.

Digital tools and hybrid advice models are increasingly present, with past investment trends showing demand for portfolio analytics, scenario testing, and AI-driven research. While technology has influenced investment processes, behavioural discipline and ongoing review remain consistent factors affecting results.

Overall, historical data suggests that Canadian investors balance growth aspirations with risk management, account considerations, and evolving digital tools. Past trends provide insights into patterns of asset allocation, sector interest, and investor psychology, helping contextualize decisions in a changing financial environment.