One Year in the Chair for TDAM's "New" Chief Investment Officer

In one word I would say - resilient. When I reflect over the past year, what I tend to think about most is the resiliency of our people. At the end of the day, our biggest assets are the people at TDAM who manage the many ups and downs of the market every day on behalf of our clients.

It's easy to forget how difficult the investing climate and conditions have been. Certainly 2022 was not a good year at all for equity and fixed income markets. But I think our people have been incredibly resilient and I've been really impressed by the care that they bring every single day to really focus on quality, the long-term and meeting our clients' needs.

For the past year, the best advice was to stay the course. I think we've all been surprised that if you look at equity markets today, many are actually up on a year-to-date basis. Same can be said for the bond markets in the U.S. So, staying the course and not going to extremes, I think has been the right strategy.

As we look out over the next 12 to 18 months, I would say it's a cautious environment for sure. For the first time in the TD Wealth Asset Allocation Committee's (WAAC) history, we are maximum overweight fixed income. We think the U.S. Federal Reserve and other central banks are closer to the end of their tightening cycles and feel it's a better environment for fixed income but are still underweight equities overall.

I think there are pockets of opportunities within the challenges we've seen in the U.S., but overall, I am still a little bit concerned about economic growth ahead and the full impact of quantitative tightening and of interest rate rises which I don’t feel have fully hit the economy yet. Broadly what I would say is the key for us is quality. It's always about quality.

On the first part of the question, I would say a lot of people feel as if they can read the tea leaves and can time the market. However, empirically and historically, that's proven very, very difficult. The advice I always give is to match the investment time horizon to the investment approach. If an investor has a 30-day investment horizon, that's a very different approach then to having a 5-, 10-, 15- or 30-year horizon.

To answer your second question, I look at central bank policy. Every time we've seen a significant tightening cycle by the central banks around the world, it causes some stress, some strain and usually marks the beginning of the next expansion cycle. I think what will surprise investors is that as earnings decrease, the market will likely actually rally because it's looking further into the future with interest rate declines coming and better days ahead. The market's a discounting mechanism. So those would be sort of the keys that I would look for.

Ok, so I'm not going to say the abuse of being a leaf fan is easy to take – its taxing on the mind. The one unfortunate thing I do see in Toronto is a lot of fans with sprained ankles due to jumping on and off the proverbial band wagon. This is where I am different. My ankles are in good shape because I stay loyal and don’t jump on and off when it's convenient to be a fan or bash during good or bad times. Same can be said about my approach to investing. During the good and bad times, staying invested and loyal to a well thought out investment plan is vital to reaching your goals. Now if only the Toronto Maple Leafs provided a reason for their fans no to "sell"!

For more insights from David, check out our most recent TDAM Talks Podcast hosted by Ingrid Macintosh, VP, TD Wealth and Head of Sales Enablement, Content Marketing & Communications, Data Analytics & Digital Strategy, TD Asset Management Inc. (TDAM). On the podcast, Ingrid's guests also included Justin Flowerday, Head of Public Equities, who also celebrated one year in the role of Head of Public Equities.

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