Welcome to Our Monthly Newsletter - Pharus Perspectives!

 

In an era of rapidly shifting markets, complex global policies, and evolving financial strategies, staying informed is no longer optional—it’s essential. This month’s edition brings forward timely analysis and strategic insights to help you navigate today’s investment landscape with clarity and confidence.

 

What You’ll Discover Inside

Market Trends: Interpret the latest developments and position yourself ahead of the curve.

The Role of Alternatives: Explore how non-traditional investments are influencing market behavior.

Summer Soundtracks: A curated playlist to energize your days and add rhythm to your routine.

Monthly World Markets Report

Deficits, Tariffs & Fed Independence

 

The latest U.S. fiscal package, escalating trade tariffs and pressure on Federal Reserve independence are reshaping market dynamics. Mounting deficits and renewed import levies risk reigniting inflation, while political influence over the Fed threatens its traditional policy framework. Investors must navigate a complex backdrop of potential rate shifts, a steepening yield curve and sector rotation to preserve returns and manage risk.

Key Takeaways

One Big Beautiful Bill fuels higher spending

• Extends 2017 tax cuts and expands deductions on state and local taxes, Social Security, tips and overtime
• Increases defense and border-patrol budgets, offsets with cuts to food benefits, green incentives and Medicaid
• Adds about US$3 trillion to the national debt over ten years

Tariffs introduce renewed inflation pressures

• On-again, off-again levies on China, EU, Canada and others raise import costs
• Companies initially absorbed higher costs but inventory buffers are depleting
• Reshoring manufacturing may drive wages and production costs higher

Fed independence under political strain

• President’s public calls for rate cuts and replacing Chair Powell create uncertainty
• A compliant Fed chair in 2026 could prioritize debt-service costs over price stability
• Rising debt servicing needs conflict with inflation-fighting mandates

Full-employment vs. inflation dilemma

• Sub-5 percent unemployment signals a full-capacity labor market
• Tight labor supply and tariffs risk fueling a summer uptick in inflation
• The Fed faces a tough choice: tighten to contain prices or ease to cushion debt burdens

 

Implications for Portfolios

Fixed Income

• Anticipate a steeper U.S. and Canadian yield curve as short rates hold and long rates climb
• Shorten duration: prefer high-quality corporate bonds over sovereign debt
• Consider floating-rate notes or bank loans to capture rising short-term rates

Equities

• Financials benefit from wider lending margins in a steepening curve
• Rotate out of rate-sensitive sectors—utilities, REITs and telecom—into cyclicals and industrials
• Hedge inflation and currency risk with multinationals and commodity producers

Diversification & Alternatives

• Gold and TIPS can help guard against policy missteps and inflation surprises
• Emerging-market debt offers yield pickup—but monitor FX volatility if the dollar strengthens
• Private credit and real assets provide stable income in a higher-rate environment

 

The full Monthly World Markets Report can be found through the link:

Monthly Performance Update

 

Market Performance- July 31st 2025
Index	1 Month	3 Months	YTD	1-Year	3-Year	5-Year
S&P TSX	1.7%	10.5%	12.0%	21.4%	15.0%	14.4%
S&P 500	3.90	14.5%	4.5%	16.7%	20.2%	16.6%
NASDAQ	5.4%	21.4%	5.3%	20.4%	22.6%	15.2%
MSCI EAFE	-1.4%	5.6%	18.3%	13.3%	14.2%	10.9%
MSCI Emerg. Mkts	2.0%	12.9%	17.9%	17.9%	11.0%	5.8%
MSCI World	1.2%	11.5%	9.9%	14.1%	14.1%	12.1%
FTSE Canada Bond Univ.	-0.7%	-0.7%	0.7%	2.90%	2.68%	-0.99%

 

Source: Click Here for Full Details.

Observed Trends from Our Research Models

As global financial markets remain fluid and investors seek clarity amid economic shifts, effective asset allocation and portfolio positioning are more critical than ever. Below, we outline the current general investment strategies we are using to balance risk and return, identifying key themes and tactical adjustments that reflect today’s evolving landscape.

 

Fixed Income Trends: Market Observations

• Tactical Shifts Observed:
  Recent research models indicate a trend toward a modest overweight in fixed income allocations (by approximately 2.5%). This appears to be driven by a focus on portfolio stability and steady income, particularly in environments where equity allocations are reduced.
• Sector Preferences:
  There is a noticeable underweighting of sovereign U.S. Treasuries in favor of credit sectors. Additionally, floating-rate notes are being explored more frequently as a potential hedge against possible future rate increases.
• Duration and Credit Positioning:
  The data suggests a modest extension of duration to take advantage of current yield levels, while remaining attentive to interest rate risks. Investment-grade corporate bonds and high-quality provincial issues are being favored for their potential to provide spread pickup with a controlled risk profile.

Equity Trends: Research Insights

Tactical Shifts Noted:
Our research models are reflecting a slight underweight in equities, with a more cautious positioning with markets being on very high valuations. There is also a discernible tilt toward defensive sectors, likely in response to ongoing inflationary pressures and an uncertain Federal Reserve policy outlook.

Barbell Strategy Patterns:

• Value Equities:
  There is a trend toward value-oriented equities, particularly in sectors such as financials and energy, which currently offer attractive valuations and steady dividend profiles.
• Growth Equities:
  At the same time, select high-quality technology and consumer discretionary stocks are being included to capture longer-term growth themes.

USD Equity ETF Utilization:
Increased use of U.S. dollar-denominated equity ETFs is being observed, likely due to their enhanced trading liquidity, tighter bid–ask spreads, and generally lower management expense ratios. These ETFs also provide broad exposure to large-cap and megacap U.S. equities.

Currency Hedging Approaches:
Some market participants are converting select CAD-denominated ETFs into CAD-hedged versions. This appears to be a strategy to help neutralize USD/CAD currency fluctuations, thereby reducing portfolio volatility and helping to preserve gains from U.S. equity holdings.

 

These observed trends reflect the dynamic nature of market conditions and the diverse strategies being explored to navigate them. As always, individual circumstances and objectives should guide any investment decisions.

 

Financial Planning Feature

CPP, OAS and Tax Essentials for Employees Working Past 65

 

Working beyond 65 is becoming the new norm rather than the exception. Whether you love what you do, want to stay active or simply boost your savings, understanding how CPP, OAS and taxes interact can make a big difference in your after-tax income. Here’s a friendly guide to help you plan your next steps with confidence.

 

A Changing View of Retirement

• Many Canadians see retirement as a gradual shift, not a full stop.
• In 2022, 41% of men and 27% of women aged 65–74 chose to keep working in part-time, consulting or self-employed roles.

Making the Most of Your CPP

• You can start collecting CPP as early as age 60 or wait until age 70.
• For every month you delay past 65, your CPP payment grows by 0.7%, up to a 42% boost at age 70.
• If you’re still working after you begin CPP, your payroll deductions go into a Post-Retirement Benefit, increasing your future pension.
• To stop CPP contributions at 65, file CRA Form CPT30 with your employer and the Canada Revenue Agency.

Getting the Best from OAS

• You qualify for Old Age Security at 65, but can defer up to age 70.
• Each month you defer adds 0.6% to your OAS benefit, for a maximum 36% increase.
• Be mindful of the OAS clawback: once your annual income tops roughly $93,000, your OAS payment starts to be recovered. Delaying OAS can help you dodge or reduce that clawback.

Simple Tax Tips for Extra Earnings

• Sync your CPP and OAS start dates to smooth out your income and avoid jumping into higher tax brackets.
• Consider pension or dividend income-splitting with your spouse to lower your overall tax bill.
• If you have a younger spouse under age 72, contribute to a spousal RRSP to shift taxable income and balance future withdrawals.
• Keep contributing to your RRSP or top up your TFSA to shelter extra earnings from tax.
• Build a flexible budget that adjusts to changing income and benefit phases.

Key Takeaways

• More Canadians are choosing to work past 65, blending career and retirement.
• Delaying CPP and OAS boosts your monthly benefits significantly.
• You’re not stuck with CPP deductions after 65—filing a simple form stops them.
• Watch your income level to avoid or manage OAS clawbacks.
• Proactive tax planning—including spousal RRSPs, deferrals and income-splitting—means more money in your pocket.

Source: Click Here for Full Details.

CIBC Smart Advice Feature

Smart Advice Spotlight – What else can you invest in? How alternative investments are shaping the market

Ivestors Embrace Alternative Investment Amid Market Turbulence

In a volatile market, a well-diversified, long-term portfolio may be your best asset.

Smart Advice host Carissa Lucreziano, was joined by Michael Demarco, Senior Vice President and Head of Alternative Strategies, CIBC Capital Markets, and Sarah Stewart, Portfolio Manager, Real Estate and Infrastructure at CIBC Asset Management to discuss why non-traditional assets are gaining traction.

Here are a few points on why you should consider alternatives:

• • Investors are seeking alternative assets to counter heightened equity and fixed-income market swings.
  • Strategies span private credit, real estate, infrastructure, commodities and hedge-fund approaches.
  • These assets can deliver smoother returns, uncorrelated income streams and potential inflation hedges.
  • Allocating 10–20% of a portfolio to private or liquid alternatives has historically reduced overall volatility.
  • Alternatives vary widely in risk profiles, liquidity terms and fee structures.
  • Thorough due diligence and careful manager selection are essential, focusing on collateral, leverage, lock-up periods and fee structures.
  • Liquid alternatives via mutual funds or ETFs improve accessibility but often carry higher expense ratios and redemption limits.
  • Direct commitments to private-market funds typically offer better economics, albeit with longer lock-ups.
  • With traditional bond yields remaining muted, alternative investments are set to stay a permanent fixture for capital preservation and income generation.

Key Takeaway: Avoid speculative swings. Study market foundations and stick to a disciplined, purpose-driven investment strategy. A modest, well-vetted allocation to alternative investments can enhance portfolio diversification, smooth out returns and help investors navigate choppy markets.

Source: Click Here for Full Details.

Financial Solution Feature

In this section, we educate the reader on different financial solutions. We discuss and elaborate each idea over a couple monthly editions. This section is not to be taken as specific advice.

Retail Investor Spotlight: How Canadians Can Tap Into CLOs for Yield and Diversification

 

With interest rates remaining elevated and traditional bonds offering limited upside, Canadian retail investors are increasingly exploring alternative fixed-income strategies. One standout option is the Collateralized Loan Obligation (CLO)—a structured credit product that’s now accessible through Canadian-listed ETFs and mutual funds. Once reserved for institutional players, CLOs are stepping into the spotlight as a smart way to boost income and hedge against rate volatility.

 

What are CLO’s?

CLOs are portfolios of senior secured corporate loans, typically made to companies with below-investment-grade credit ratings. These loans are bundled and divided into tranches, each offering different levels of risk and return. The most senior tranches (AAA-rated) are considered the safest and receive priority in interest payments.

 

Here’s why CLOs are gaining traction among Canadian individual investors:

• • Enhanced Yield: CLOs—especially AAA-rated tranches—often offer higher yields than traditional investment-grade bonds.
  • Floating-Rate Advantage: Most CLOs are tied to floating interest rates, making them ideal in a rising rate environment.
  • Diversification: CLOs are backed by hundreds of loans across industries, reducing exposure to any single borrower.
  • Low Default History: AAA-rated CLO tranches have historically had near-zero default rates over the past 30 years.

 

How Canadians Can Invest in CLO’s

Retail investors don’t need to buy CLOs directly. Instead, they can access them through Canadian-listed ETFs and mutual funds, which offer professional management, liquidity, and transparency.

 

What to Consider

• • Complexity: CLOs are sophisticated instruments—ETFs and mutual funds simplify access but still require understanding of credit risk.
  • Fees: Actively managed funds may carry higher fees; compare expense ratios carefully.
  • Liquidity: ETFs offer daily trading, while mutual funds may have redemption restrictions.

 

Final Thoughts

• • CLOs offer Canadian retail investors a compelling way to earn higher income, diversify their portfolios, and hedge against rising interest rates. With the launch of Canadian-listed ETFs and mutual funds targeting AAA-rated CLO tranches, this once-exclusive asset class is now within reach.
  • Whether you're a conservative investor seeking stability or a yield hunter looking for alternatives, CLOs deserve a spot on your radar.

 

Fun Idea

Feel-Good Beats to Survive the Dog Days of Summer – Office Edition

As August turns up the heat and inboxes grow longer, we’ve curated the perfect summer playlist to help you power through. Featuring staff picks and personal blurbs, these tunes are more than just catchy—they’re practically productivity fuel. Whether it’s a midweek slump or a post-lunch lull, there’s something here to keep you grooving.

10 Summer Songs to Keep Cool and Carry On

1. “Heat Waves” – Glass Animals “This one feels like a cool breeze through my headphones when the AC’s losing the battle. Perfect for deep focus.” – Mateo, Design
2. “Walking on Sunshine” – Katrina and the Waves “It’s my go-to for turning a rainy Monday into a sunny mindset. Impossible not to bop along.” – Jamie, HR
3. “Summer” – Calvin Harris “This gets me through 3:00pm on a Friday when the weekend feels just out of reach.” – Priya, Marketing
4. “Hot in Herre” – Nelly “I play this every time I refill my iced coffee—it’s practically tradition at this point.” – Leo, Sales
5. “Sunny” – Boney M. “It’s got that retro sparkle. I hit play during long afternoon email sessions.” – Cass, Ops
6. “Surfin’ USA” – The Beach Boys
7. “Can’t Stop the Feeling!” – Justin Timberlake
8. “Cruel Summer” – Taylor Swift
9. “Vacation” – The Go-Go’s
10. “Lovely Day” – Bill Withers

So whether you're cruising through Q3 or just trying to make the most of iced beverage season, these jams might just be your new summer sidekick. Have a favorite summer anthem we missed? Drop it in the team chat and keep the good vibes going.

—Your Friendly Office DJ

To stay up to date on market events, news, and reports, follow Pharus Wealth Advisory Group on our Social Media Pages. For Financial Literacy and Planning, visit Pharus Resources, where we upload timely articles on Financial Planning and Financial Literacy Resources.

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Pharus Wealth Advisory Group

The Beacon to your Financial Journey

1623 Avenue Road, Toronto ON M5M 3X8

Phone: 416 861-2460

Email: mailbox.pharuswealth@cibc.com

Website: www.pharuswealth.ca