Market Update April 2026
Markets remain unsettled as investors continue to weigh softer economic growth against higher energy prices and ongoing geopolitical risk. In Canada, the Bank of Canada held its policy rate at 2.25%, reiterating that it is carefully balancing weaker domestic growth with the risk that inflation could reaccelerate if energy prices remain elevated.
Geopolitical tensions, particularly in the Middle East, have kept oil and gas prices under pressure. While energy strength can support parts of the Canadian market, persistently higher fuel and transportation costs may eventually filter through to broader areas of the economy, impacting consumer prices, business input costs, and overall market sentiment.
In environments like this, markets often remain sensitive to headlines and policy signals. Historically, disciplined positioning and patience, rather than short-term reactions have been the most effective tools for navigating periods of uncertainty.
Portfolio Update
We made a few measured and deliberate adjustments to portfolios this month.
We reduced exposure to U.S. equities, took profits in gold following a strong run, and increased overall portfolio yield. We also continue to maintain a higher allocation to cash and money market instruments, currently at approximately 23%, as we wait for greater clarity on economic conditions, policy direction, and geopolitical developments.
Holding elevated cash is not about market timing. Instead, it reflects a conscious decision to reduce volatility, protect capital, and maintain flexibility while near-term risks remain elevated. Cash provides stability today and gives us the ability to act decisively if opportunities present themselves.
Adding Dynamic Alternative Yield to enhance Portfolio Income
This month, we added Dynamic Alternative Yield to portfolios as part of our ongoing focus on generating reliable income while managing risk.
Dynamic Alternative Yield is designed to produce income from multiple sources, rather than relying solely on traditional bonds. The fund generates cash flow through interest earned from lending to high-quality companies and institutions, option-based strategies that collect premiums regardless of market direction, and income from infrastructure, preferred shares, and other real-asset investments.
Because these income sources are diversified, portfolio cash flow does not depend on any single market outcome, interest-rate move, or equity trend. An important feature of this strategy is flexibility, the managers can adjust allocations as conditions change, emphasize different income sources, manage risk actively, and hold cash when appropriate. This helps smooth income over time and reduces sensitivity to both interest-rate swings and equity market volatility.
All income is pooled and distributed monthly, supporting cash-flow needs while allowing the portfolio to remain invested without being forced to sell assets during periods of market stress. In the current environment, Dynamic Alternative Yield complements our higher cash position by helping maintain income, diversify risk, and preserve flexibility.
Why It Matters
Taken together, our positioning reflects the current environment — one where uncertainty remains elevated and market leadership is more concentrated.
Our objectives remain unchanged:
Protect capital where appropriate
Generate consistent and sustainable income
Reduce unnecessary volatility
Maintain flexibility as conditions evolve
By balancing higher cash levels with diversified income strategies, we aim to stay invested in a controlled and thoughtful way, rather than reacting to short-term market movements.
Canada vs. U.S. — A Relative View
Canada has continued to look more defensive and commodity-supported, driven by stronger exposure to energy, materials, and financials. This has helped the Canadian market hold up relatively well as global uncertainty persists.
The U.S. market, by contrast, remains more concentrated, with performance heavily influenced by large-cap growth and AI-related companies. While this creates upside potential if earnings remain strong, it also increases vulnerability to market volatility, earnings disappointments, and policy shifts.
Over the next three months, Canada appears steadier due to its sector composition, while the U.S. remains volatile, while offering growth long term but carrying greater near-term risk.
Bottom Line
Markets rarely move in straight lines, particularly during periods shaped by geopolitics, energy dynamics, and central-bank uncertainty. Our approach remains grounded in discipline, diversification, and long-term perspective.
We will continue to adjust portfolios thoughtfully as conditions evolve, always with the goal of protecting your capital, generating reliable income, and supporting your long-term financial plan.
If you have any questions or would like to review how this positioning applies to your situation, please remember we are always here for you.
With kind regards,
Your SilverBirch Wealth Management Team
