Despite the ongoing geopolitical and economic volatility that marked 2025 and will continue to shape 2026, institutional investors are taking a measured approach and viewing their portfolios through a long-term lens.

“You can indicate those risks, but it’s not going to change the way we invest — it’s just an added risk,” says Jennifer Shum, senior managing director of structured and private credit at the Healthcare of Ontario Pension Plan. “We look for the best opportunities anywhere, risk-return wise.”

Read: Canadian asset owners increasingly re-thinking U.S. allocations due to currency risk, Trump policies: report

That approach has yielded opportunities such as the HOOPP’s recent investment in a Richmond Hill, Ont. data centre alongside the ongoing artificial intelligence boom — another trend shaping the world of 2026 and beyond.

Tariffs and trade talks

Just like the first week of 2025, early 2026 got off to a raucous start.

Within weeks, global stock markets took a bumpy ride amid U.S. President Donald Trump’s on-again, off-again tariffs on its trading partners. While tariffs have caused short-term disruption, the worst-case scenarios that economists were predicting haven’t yet come to pass, says Yusuke Khan, investments leader at Mercer Canada.

Positive outlook for 2026

• 73% of global institutional investors have a positive outlook for 2026.

• 81% of respondents expect 2026 will be a particularly good year for private markets, despite rising concerns around geopolitical tensions and market volatility.

• Among Canadian institutional investors, technological change (83%) and the private market environment (81%) were ranked the most favourable investment factors for the year.

Source: Ontario Teachers’ Pension Plan survey, December 2025

However, he expects the upcoming review of the Canada-U.S.-Mexico Agreement will shape economic trends for months and years to come. In January, Trump called the trade pact — which was initiated during his first presidential term — “irrelevant,” setting up a potentially rocky review ahead.

This uncertainty could impact Canadian public equities if businesses hold off on capital investments, says Dimi Ntantoulis, Canadian equity growth portfolio manager at MFS Investment Management.

“I don’t think anyone is going to walk away [from] this, because it’s so important to all three nations but, until that’s resolved, there may be some hesitation by businesses in making those decisions.”

Read: What could a second Trump presidency mean for Canadian institutional investors?

While a renegotiation or cancellation of the CUSMA could cause further volatility, uncertainty over the future of the agreement could also result in near-term economic growth, says Soami Kohly, MFS’ Canadian fixed income portfolio manager. “The flip side is, in the first two quarters, it actually may boost economic growth, to the extent that companies are worried about cancellation [and they may] front run a lot of economic activity.”

A possible U.S. pivot on the CUSMA is just one example of a growing shift towards populism in many countries around the world.

However, despite the noise of daily headlines, opportunities exist in public equities yielded by a greater focus on governments using economic policy — in particular, fiscal policy — as a way to support economic growth in countries that have taken a populist approach, says David Ross, senior executive managing director and global head of liquid assets at the OPSEU Pension........

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