Weeks since assuming office, U.S President Trump has issued a record number of executive orders and is spinning markets with new tariff announcements by the day, causing economic growth forecasts (most notably for Canada) to change frequently. These headline-grabbing developments have obscured the fact that both the U.S. and Canadian economies started 2025 with better-than-expected momentum, to the credit of consumers.

Canada will still absorb the greatest uncertainty and potential scarring to investment. However, is there a silver lining in all of this for the Canadian economy? Will it also uncover new opportunities amidst an existential crisis? In an effort to search for some of these answers, we recently had an opportunity to chat with James Hunter, Vice President and Director, Portfolio Manager, TD Asset Management Inc. (TDAM).

Getting to know James

James joined TDAM in 2014 and is the Lead Manager of the TD Monthly Income Fund, the TD Canadian Diversified Yield Fund, the TD Preferred Share Fund, the TD Active Preferred Share ETF, the TD Canadian Large Cap Equity Model and the firm's institutional preferred share portfolios. He is also Co-Manager of the TD Dividend Income Fund, the TD Dividend Growth Fund and the TD Active Global Real Estate ETF. James was previously a research analyst in the Fundamental Equity team covering several industries over nine years, including banks, insurance, real estate, energy and utilities. Prior to joining the firm, he spent four years in the investment division of a leading Canadian insurance company. James holds a B.Comm. from Queen's University and an M.Sc. in Finance and Investment from the University of Edinburgh and is a CFA Charter holder.

Before we get into discussing the current investing environment, can you tell us a bit about your career path to where you are now?

I started at TDAM as an equity analyst and had already come into the role with a few years' experience in both equities and fixed income. However, in retrospect, I was still very green. When I arrived at TDAM I focused on energy for three years, and that sector went straight down during that time. Then my focus shifted to pipelines/utilities/real estate investment trusts and preferred shares, which during that time were out of favour. Finally, I began to cover banks and insurers, which were at the top of the market in 2022. I was fortunate because the timing of my different sector focuses helped me learn a lot in a short period of time and provided me with invaluable perspective - something that I still leverage to this day.

Do you have an overarching theme you apply when it comes to investing?

My thought process when it comes to investing is multifaceted, but my key consideration or theme would be around investing industry leadership. One example of this way of thinking is that I like to rank companies in their industries from best to worst and then focus on the best ones. My metrics for determining what's best include what company has the largest market share, best capital allocation and best part of the value chain, among many other considerations. This is all assuming they are not too expensive.

What are your thoughts on the current investing environment when it comes to financials?

Financials had a tough ride coming out of the financial crisis of 2008. They were rebuilding balance sheets due to inadequate capital, stifled under more regulation, and it was challenging to grow profits when interest rates were essentially 0%. It has been a long rebuild but now we are in a very different environment. There is a lot of available capital, it is less challenging to grow profit when interest rates are in the 4% to 5% range, and there is a more diversified business mix and an inflationary backdrop. Also, many banks and insurers have grown closer to customers through digitization, rather than being disintermediated as once thought. This can be beneficial to the bottom line in the form of lower expenses as technology proliferates in the business, helps keep ROEs high and leads to shareholder returns (dividends, buybacks). This is an attractive part of the market.

How do you approach your income mandates?

I lead several income portfolios, like the TD Monthly Income Fund and the TD Canadian Diversified Yield Fund. I believe in using each asset class for what it's naturally suited for. With equities I look for quality earnings/free cash flow growth to form a truly diversified conglomerate of businesses. For preferred shares I look for tax-efficient income and stick to quality, investment-grade issuers. Finally, with bonds I look for an attractive risk/reward and value-added opportunities.

What is the one event when you look back over your career that pops out as being one of the most important to date?

The one event I'll never forget was the Covid-19 Pandemic. The rapid spread of a new and deadly virus was very concerning; the response from many governments - to close offices, schools, restaurants, gyms - was life-changing. In time, society adapted, but not before a fair amount of damage was done. There was a significant impact on asset prices. The stock market crash in March 2020 was dramatic, and the rally, thereafter, fueled by both monetary and fiscal policy, was epic. I learned a lot during that period about how markets can overreact and how fundamentals change. As investors, we have the responsibility to think through evolving market conditions and help our clients navigate the ups and downs.

What keeps you entertained outside of the office?

Normally I like to keep busy playing a variety of different sports in my spare time, but that changed seven months ago as I became a new dad to a wonderful little daughter. Being a new father has opened my eyes to a host of new feelings and a new perspective on life. It also doesn't allow for any binge watching of my favourite shows either!

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道明资产管理有限公司 (TD Asset Management Inc.) 是道明银行 (The Toronto-Dominion Bank) 的全资拥有附属机构。

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