Welcome to Our Monthly Newsletter - Pharus Perspectives!

Summer is moving by quickly, and with the warmer weather continuing across the GTA, it’s hard to believe we are already into August. Markets have also continued their summer momentum, with major equity markets recovering from earlier volatility and moving back toward near all-time highs. While headlines and uncertainty remain, strong corporate earnings and continued investment in areas such as artificial intelligence have helped support markets.

In this month’s issue, we explore several themes that can help investors and families make informed decisions as we move through the second half of the year:

Inside This Month’s Edition

• Portfolio Strategy: Markets have continued to advance, reinforcing the importance of maintaining a disciplined, diversified approach rather than allowing near-term market levels to drive investment decisions. We discuss considerations around equity exposure, diversification and opportunities beyond the largest U.S. companies.
• Charitable Giving: For those incorporating philanthropy into their wealth plans, the asset used to make a donation can be just as important as the amount donated. We explore how donating appreciated investments directly to charity may help reduce the tax cost of giving while maximizing the value of a charitable gift.
• Executive Compensation: Our own Shamin Khan examines how bonuses, RSUs, stock options and pensions can become significant drivers of long-term wealth—and, if left uncoordinated, create tax liabilities and concentrated exposure to an employer. The article highlights the importance of viewing compensation as part of a broader wealth strategy.
• CIBC Smart Advice: This month, we highlight how successful Canadian families approach the challenge of staying wealthy. Beyond building wealth, maintaining it requires thoughtful planning around investments, taxes, family governance and long-term decision-making.

As always, our goal with Pharus Perspectives is to provide timely insights and practical considerations that can help you navigate changing markets and make informed decisions about your wealth.

We hope you enjoy this month’s issue and, as always, please don’t hesitate to reach out if there is anything we can help you with.

Monthly World Markets Report

Markets Continue to Broaden

Global markets have continued to perform well in 2026, but one of the more important developments has been the broadening of market leadership. While mega-cap technology companies remain important, returns are increasingly being driven by a wider range of sectors, regions and company sizes.

According to the latest CIBC World Markets report, four major investment themes are shaping markets: AI infrastructure, energy and the power grid, defence, and reshoring and supply-chain investment. These trends are driving significant capital spending globally and creating opportunities well beyond the technology sector.

North American Equities

U.S. equities continue to benefit from a resilient economy, strong consumer spending and robust corporate earnings. The continued buildout of AI infrastructure is supporting demand for semiconductors, data centres, power generation and related industries. Consensus expectations call for approximately 29% earnings growth for the S&P 500 in 2026.

Valuations, however, remain an important consideration. While strong earnings growth has helped bring the S&P 500’s forward valuation closer to its long-term average, several sectors—including technology—remain above historical valuation levels. Continued AI investment could support further gains, but concerns about the sustainability and returns of that spending remain a potential source of volatility.

Canadian equities face a more challenging economic backdrop, with higher unemployment and more cautious consumers. However, Canadian companies continue to generate solid earnings growth, with consensus expectations calling for approximately 25% EPS growth for the TSX in 2026.

The Canadian market also offers attractive exposure to energy, materials and industrials, which remain relatively inexpensive compared with their historical valuations. Financials, Canada’s largest sector, are more highly valued and could have a significant influence on the direction of the broader TSX.

Global & International Markets

The broadening of market leadership is also evident internationally.

Japan has benefited from corporate reforms, improved capital efficiency, increased shareholder returns and significant investment in AI and semiconductors.

Europe has delivered positive returns overall, although performance has varied considerably between countries and sectors. Industrial companies, financials and technology have generally been among the stronger areas.

Emerging markets have benefited from the global technology investment cycle, particularly South Korea and Taiwan, where semiconductor manufacturers are playing a critical role in the AI supply chain. Emerging-market strategies excluding China have been among the stronger performers this year.

Small-Cap Equities

One of the most notable developments in 2026 has been the resurgence of U.S. small-cap equities.

The Russell 2000 has significantly outperformed the S&P 500 through the first half of the year, supported by technology, industrials, AI infrastructure and the reshoring of manufacturing.

This is an important change from the narrow market leadership experienced in previous years. Investors are increasingly finding opportunities outside the largest technology companies, suggesting that market breadth may continue to improve.

Fixed Income

Bond markets remain influenced by inflation, interest rates and geopolitical uncertainty.

Higher energy prices could keep inflation elevated and make central banks more cautious about cutting rates. At the same time, credit spreads remain historically tight, meaning investors are receiving relatively little additional compensation for taking on additional corporate credit risk.

The report therefore emphasizes the importance of maintaining quality and diversification within fixed income, rather than reaching too far for additional yield.

Four Structural Trends Driving Markets

The report identifies four major capital-investment cycles that could influence markets for years to come:

• AI Infrastructure — Data centres, semiconductors, computing capacity and supporting infrastructure.
• Energy & the Power Grid — Growing electricity demand is creating significant investment opportunities across power generation and transmission.
• Defence — Increased geopolitical uncertainty is driving greater government investment in defence and aerospace.
• Reshoring & Supply Chains — Governments and businesses are investing to strengthen domestic manufacturing and reduce supply-chain vulnerabilities.

These trends represent more than short-term market themes. They are multi-year investment cycles that could have a meaningful impact on corporate earnings, capital spending and economic growth.

Key Takeaway

The key message from CIBC’s latest report is that market leadership is broadening.

While U.S. mega-cap technology companies remain important, opportunities are increasingly emerging across small- and mid-cap companies, industrials, energy, infrastructure, defence, financials and international markets.

With earnings expectations remaining strong and several powerful structural investment trends underway, the outlook for equities remains constructive. However, elevated valuations in certain areas and ongoing geopolitical, inflation and interest-rate risks reinforce the importance of diversification and selectivity.

Monthly Performance Update

Source: Click Here for Monthly World Market Report.

Model Research Observations

With equity markets continuing to advance and major U.S. indices trading near record levels, investors may be asking whether it is still an appropriate time to invest. While market momentum remains positive, periods of strong performance can also make it tempting to chase areas of the market that have already performed well.

A disciplined approach remains important. Rather than focusing solely on recent winners, investors may want to consider quality, diversification and valuations when assessing their portfolios.

What Should Investors Be Watching?

Earnings Growth:

Strong corporate earnings remain an important support for equity markets. Investors should continue to assess whether earnings growth can justify current valuations, particularly in areas of the market that have experienced significant gains.

Broader Market Opportunities:

Market leadership has increasingly expanded beyond the largest U.S. technology companies. This may create opportunities across other sectors, regions and company sizes, reinforcing the importance of maintaining a diversified portfolio.

Interest Rates & Inflation:

Inflation and the direction of interest rates continue to influence both equity and fixed-income markets. Investors should consider how changes in monetary policy could affect different areas of their portfolios.

Geopolitical Risk:

Ongoing geopolitical tensions can influence energy prices, inflation and global economic growth. Maintaining diversification across asset classes and regions can help reduce reliance on any single economic or geopolitical outcome.

Quality & Long-Term Growth:

In an environment where valuations are elevated in certain areas, emphasizing financially strong businesses with durable competitive advantages and sustainable long-term growth potential can help investors avoid simply chasing market momentum.

Overall Perspective

The current environment remains constructive, but it is not without risks. Rather than attempting to predict short-term market movements, investors may benefit from maintaining a long-term, diversified strategy, periodically reviewing portfolio allocations and ensuring that investments remain aligned with their objectives, risk tolerance and time horizon.

Markets will inevitably experience periods of volatility. A well-constructed portfolio is designed not only to participate in periods of growth, but also to provide diversification and resilience when market conditions change.

Pharus Resources

Special Feature | Executive Compensation and Long-Term Wealth Planning

For today’s Canadian executives, compensation often extends well beyond salary. Bonuses, RSUs, stock options, pensions and other incentive programs can be powerful wealth-building tools—but they also introduce tax considerations, concentration risk and important planning decisions.

In our latest article, Shamin Khan of Pharus Wealth Advisory Group explores how executives can think about compensation as part of a broader, integrated wealth strategy rather than managing each component in isolation.

Key Considerations

• Look at the complete compensation picture: Salary, bonuses, equity awards, pensions and personal investments should be considered together when making long-term wealth decisions.
• Manage employer concentration: RSUs and stock options can cause exposure to a single company to grow significantly over time. Establishing a deliberate approach to employer equity can help manage this risk.
• Plan for taxes before compensation is received: Bonuses, equity vesting and option exercises can create significant and uneven tax liabilities. Coordinating these events with RRSP contributions, investment gains and other planning opportunities can improve overall tax efficiency.
• Think beyond the current year: Compensation decisions can affect retirement income, portfolio diversification, charitable giving and estate planning well into the future.

Executive compensation is more than a measure of annual income—it can be one of the most significant drivers of long-term wealth. Read Shamin’s full article for a deeper look at stock options, RSUs, bonuses, employer concentration and how these pieces can be integrated into a comprehensive wealth strategy.

Read the full article: Executive Compensation in Canada: Stock Options, RSUs, Bonuses and Long-Term Wealth Planning

Financial Planning Feature

Financial Planning | Making Charitable Giving More Tax-Efficient

A Strategic Approach to Charitable Giving

For many affluent Canadians, charitable giving is an important part of their broader wealth plan. While cash donations are straightforward, the asset used to fund a charitable gift can have meaningful tax implications.

A recent Toronto Star article highlights an often-overlooked strategy: donating appreciated investments directly to charity rather than selling them first. For investors with significant unrealized gains in their portfolios, this approach can potentially reduce the tax cost of giving while allowing more of the investment’s value to benefit the charitable organization.

Key Considerations

• Look beyond cash when planning a charitable gift. If you hold appreciated securities in a non-registered portfolio, donating the investment directly may be more tax-efficient than selling it and donating the after-tax proceeds.
• Potentially eliminate the capital gains tax. Qualifying publicly traded securities, mutual fund units and certain segregated-fund interests donated directly to a qualified donee can generally receive a zero capital-gains inclusion rate, subject to applicable conditions.
• The full value of the gift can still generate a donation tax credit. In addition to potentially eliminating the capital gains tax, the donor may generally receive a charitable donation receipt based on the eligible amount of the gift.
• Consider which assets you donate. From a portfolio-management perspective, charitable giving can also be an opportunity to transfer highly appreciated securities while preserving cash or other assets for future needs.
• Plan larger gifts carefully. Donation limits, carry-forward provisions and reporting requirements should be considered when incorporating charitable giving into a broader tax and estate plan.

Main Takeaway

For investors with substantial unrealized gains, the most tax-efficient charitable gift may not be cash—it may be an appreciated investment.

By donating qualifying securities directly to charity, investors may be able to support their philanthropic objectives while reducing the tax cost associated with realizing capital gains. This can make charitable giving a more integrated component of an overall wealth strategy rather than simply an annual tax decision.

A Broader Wealth-Planning Perspective

Charitable giving can serve several objectives within a comprehensive wealth plan: supporting causes that are important to you, managing the tax implications of an investment portfolio and, where appropriate, incorporating philanthropy into longer-term estate planning.

The optimal approach will depend on the type of assets held, unrealized gains, income, charitable objectives and broader estate and tax considerations. For significant charitable gifts, coordinating with your financial and tax advisors can help ensure the strategy is aligned with your overall wealth plan.

Source: Toronto Star, “How can donating investments directly to charity save money at tax time?”

CIBC Smart Advice Feature

CIBC Smart Advice: How Successful Families Stay Wealthy

Building wealth is only part of the equation. The more difficult challenge can be preserving it, putting it to work with purpose, and passing it on successfully to the next generation. In this month’s CIBC Smart Advice feature, Lana Robinson shares lessons from her experience working with successful Canadian families and business owners, highlighting the habits and behaviours that help wealth endure across generations.

Key Highlights

• Start with a clear vision. Successful families define what they want their wealth to accomplish—not just financially, but in terms of family, community, philanthropy and their broader values.
• Make decisions together. Open conversations about family values and goals can create alignment and consensus, helping families turn intentions into an actionable plan.
• Give money a purpose. Rather than viewing wealth as one large pool, families can think about different pools of capital for specific objectives, such as education, philanthropy, financial independence and future generations.
• Make saving a commitment. Treating savings like any other financial obligation can help create disciplined habits. As income increases, directing additional funds toward long-term goals can help turn higher earnings into lasting wealth.
• Prepare the next generation. Wealth can create challenges when beneficiaries are unprepared for it. Age-appropriate transparency and conversations about family wealth, values and estate plans can help reduce surprises and potential conflict.
• Plan for the future, while remaining flexible. A financial plan can provide clarity and confidence during periods of market volatility or changing circumstances. Successful families regularly revisit their plans and make adjustments as their goals evolve.
• Build a trusted advisory team. Major financial decisions can involve tax, investment, estate, liquidity and other considerations. Bringing together trusted professionals with different areas of expertise can help families make more informed decisions.

Key Takeaways

The conversation reinforces a simple principle: lasting wealth is built through purpose, planning and discipline—not just through earning more money. Defining what you want your wealth to accomplish, creating a plan to get there, seeking professional advice and committing to the process can help turn financial success into lasting wealth.

Listen to the full conversation: Explore the CIBC Smart Advice podcast to hear Lana Robinson share more insights and real-world examples of how successful families build, protect and pass on their wealth.

We encourage you to read the full article here:

Read the full transcript at the following link:

https://www.cibc.com/en/transcripts/smart-advice-s4-e6.html

Financial Insights

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.

Retirement Compensation Arrangements: An Additional Layer for Executive Retirement Planning

For many executives and business owners, building wealth for retirement is not necessarily the biggest challenge. The greater challenge can be determining how to structure that wealth efficiently and create the retirement income they want.

Registered retirement plans such as RRSPs and employer pension plans are valuable tools, but they have limits. For highly compensated executives, the income they earn during their working years can be significantly greater than the retirement income that traditional registered plans are designed to replace.

This is where a Retirement Compensation Arrangement (RCA) may have a role to play.

An RCA is a specialized retirement arrangement that can allow an employer to provide additional retirement benefits to an executive or key employee. It can be particularly relevant when there is a significant gap between an individual’s current compensation and the retirement income available through conventional pension and registered savings plans.

Building Your Retirement Income: Multiple Layers, One Strategy

Retirement planning for a high-income executive is rarely about relying on a single account or source of income. Instead, the objective is often to build multiple layers of retirement income, each serving a different purpose.

The key takeaway: An RCA is not intended to replace traditional retirement savings. Instead, it can provide another layer of retirement income when conventional pension and registered plans may not be sufficient to meet an executive’s retirement objectives.

How Does an RCA Work?

A Retirement Compensation Arrangement is established through an arrangement between an employer and employee. Contributions are made to an RCA trust, which holds and invests the funds until benefits are eventually paid to the employee.

One of the defining characteristics of an RCA is its 50% refundable tax mechanism.

When an employer contributes to an RCA, generally 50% of the contribution is remitted to the Canada Revenue Agency as refundable tax. The remaining 50% is available to be invested within the RCA.

For example:

Investment income and capital gains earned within the RCA are also generally subject to the 50% refundable tax.

The important distinction is that this tax is refundable under the RCA rules as retirement benefits are paid out. The mechanism is therefore designed to facilitate the eventual payment of retirement benefits rather than simply representing a permanent 50% tax.

Who Might Consider an RCA?

An RCA is not appropriate for everyone. It is generally most relevant for individuals who have high and consistent employment income and a significant need for retirement income beyond what their existing pension and registered plans can provide.

Potential candidates may include:

· Senior corporate executives with substantial compensation packages

· Business owners who receive significant employment income

· Professionals with high incomes and limited pension benefits

· Executives whose employer does not provide a sufficient defined-benefit pension

· Individuals who have already maximized their RRSP and other registered retirement savings opportunities

· Employees who expect a substantial reduction in income when they retire and want to create a supplemental source of retirement income

Consider an executive earning $500,000 or $750,000 per year. Even with disciplined RRSP and TFSA contributions, there can be a significant gap between their working income and the level of retirement income they may ultimately want.

An RCA may help address that gap as part of a broader executive compensation and retirement strategy.

How Is an RCA Taxed?

The taxation of an RCA is one of its defining characteristics.

Unlike an RRSP, an RCA does not simply allow investments to grow tax-free. Contributions and investment income are subject to the 50% refundable tax within the RCA.

When money is eventually distributed from the RCA to the employee, the distribution is taxable to the recipient as income.

This means an RCA is not simply a strategy to “avoid” tax. Rather, the strategy is generally about the timing of taxation and the potential alignment of income with an individual’s retirement tax bracket.

For someone earning a very high income today and expecting to be in a lower tax bracket during retirement, there may be an opportunity to shift some compensation toward retirement years.

However, the potential benefits need to be evaluated against the RCA’s unique tax treatment, investment returns, contribution structure, administrative costs and the individual’s expected retirement tax rate.

What Can an RCA Invest In?

An RCA is an investment trust rather than a conventional registered investment account with a standardized menu of investments.

Depending on the structure of the arrangement, custodian and governing documents, an RCA may hold a diversified portfolio that includes:

· Canadian and U.S. equities

· International equities

· Government and corporate bonds

· Exchange-traded funds

· Mutual funds

· Cash and money-market investments

· Other permitted investment products

The investment strategy should be considered separately from the tax structure.

Because an RCA may be designed to provide retirement income many years into the future, the portfolio can be constructed around the individual’s retirement timeline, risk tolerance, income requirements and broader financial plan.

Importantly, the RCA’s unique tax treatment means that investment selection and portfolio construction should be evaluated within the context of the overall strategy.

Putting It All Together

For a high-income executive, retirement planning can involve much more than simply maximizing an RRSP.

The objective is to determine how much retirement income will be needed, where that income will come from, when it should be received and how each source will be taxed.

An RCA can potentially add another layer to that strategy:

Government Benefits → Employer Pension → RRSP/RRIF → TFSA → RCA → Personal & Corporate Assets

The appropriate mix will depend on each individual’s circumstances.

A Strategy Worth Exploring

For executives and business owners with significant compensation and a long retirement horizon, an RCA may provide an additional way to build retirement benefits beyond the limits of traditional registered plans.

The most important question is not simply:

“Can I establish an RCA?”

It is:

“Does an RCA make sense as part of my overall compensation, investment and retirement strategy?”

For the right individual, it can be a valuable additional layer in a comprehensive retirement plan.

RCA structures are complex and should be evaluated with your financial, tax and legal advisors. The information above is intended for general educational purposes and should not be considered tax or legal advice.

Fun Feature

Two Weeks Left: Make the Most of Summer in the GTA

It’s hard to believe, but summer is already entering its final stretch.

With Labour Day just around the corner and the back-to-school routine about to begin, there are only a couple of weeks left to make the most of those long evenings, warm weekends and slower summer days.

If your calendar still has a little room, here are a few things worth checking off the list before summer officially winds down.

Take in the CNE

August 21 – September 7 | Exhibition Place

Few Toronto traditions say “end of summer” quite like the Canadian National Exhibition. The midway, live entertainment, food vendors, shopping and the Canadian International Air Show make the CNE an easy choice for a final summer outing.

Our tip: Go on a weekday or earlier in the day if you want to avoid the biggest crowds — or make a full evening of it and stay for the waterfront atmosphere.

CNE 2026 information

Spend an Afternoon on the Toronto Islands

Toronto Islands| Address: St Lawrence-East Bayfront-The Islands, ON, Canada

You don’t have to leave the city to feel like you’ve escaped it. Take the ferry across, rent a bike, spend some time at the beach and enjoy the skyline from the water.

For something a little quieter, head toward Ward’s Island rather than spending the entire afternoon around Centre Island. The Islands offer beaches, walking and cycling paths, green space and plenty of opportunities to simply slow down. (Destination Toronto)

Summer challenge: Pack a picnic, leave the phone in your bag and stay until sunset.

Make the Most of Patio Season

Toronto’s patio season is one of the things we often don’t appreciate until it’s gone.

Pick a neighbourhood you’ve been meaning to explore — Ossington, Leslieville, The Beaches or the waterfront — and make an evening of it. Start with dinner outside, walk the neighbourhood and finish with a drink or dessert.

STACKT market is another option for a more casual evening, with food, drinks, events and an outdoor market atmosphere downtown.

Our tip: Don’t over-plan it. Pick a neighbourhood, choose one place for dinner and see where the evening takes you.

Get Outside Without Leaving Toronto

Evergreen Brick Works| Web |Address: 550 Bayview Ave, Toronto, ON M4W 3X8, Canada Phone: +1 416-596-7670

If you’ve spent most of the summer around pools, patios and beaches, try something different.

Evergreen Brick Works offers access to Toronto’s ravine system, walking trails, markets and outdoor spaces — making it an easy way to spend a few hours outside without committing to a full-day trip.

(Destination Toronto)

For an easy Saturday morning, combine a walk through the Don Valley with a visit to the farmers’ market.

Find an Outdoor Movie or Concert

There’s something uniquely Canadian about watching a movie or listening to live music outside on a warm August evening.

Harbourfront Centre continues to offer summer programming, including outdoor entertainment and Free Flicks, while Summer Music in the Garden continues through August 27. (Over Here Toronto)

Harbourfront Centre is particularly easy to pair with dinner, a waterfront walk or drinks afterward.

Have One More Classic Beach Day

Woodbine Beach| Web | Address: 1675 Lake Shore Blvd E, Toronto, ON M4L 3W6, Canada

Before the evenings get shorter, make time for one more proper beach day.

Woodbine is an easy option for swimming, walking the boardwalk, beach volleyball or simply finding a spot in the sand. (Destination Toronto)

And if you want something that feels a little more like a getaway, head to the Toronto Islands instead.

The End-of-Summer Checklist

Before the kids go back to school, try to check off at least one:

• CNE evening
• Toronto Islands day
• One more patio dinner
• Outdoor concert or movie
• Beach day
• Farmers’ market morning
• Sunset walk along the waterfront
• One spontaneous summer evening

Because summer doesn’t really end when the calendar says September. It ends when we stop making time for it.

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.

Click here to visit Pharus Resources.

Pharus Wealth Advisory Group

The Beacon to your Financial Journey