The markets have come full circle over the past few weeks. However, as we enter the back half of the year, I’ve been getting questions about what we could expect in the coming months.

We’ve learned that “being unpredictable” is the most predictable trait of the U.S. administration. So, what should investors do in the face of this uncertainty? Reset expectations, focus on fundamentals, and above all, adapt.

Here are “Four Key Investment Themes” to help navigate the months ahead:

1. Diversification Is Non-Negotiable

Markets dislike uncertainty, yet that’s exactly what 2025 has delivered. With global trade in flux, geopolitical tensions flaring, and policy clarity in short supply, relying on a single region, sector, or asset class is more dangerous than ever. Many portfolios, particularly in Canada and the U.S., remain heavily concentrated in domestic equities and, even more specifically, in large-cap U.S. tech stocks. That strategy worked for years; however, it may not work going forward.

True diversification requires spreading risk not just across companies or sectors, but across geographies and asset classes–which is what we’ve done in our portfolios. It helps cushion against shocks and smooth out long-term performance. In an era of unpredictable catalysts, it’s a critical difference between good experiences and poor ones.

2. Look Beyond Traditional Asset Classes – “5 vs 2”

What do institutional managers–like pension plans, endowment funds, and charitable foundations–know that retail investors don’t? Their investment strategies have long looked beyond traditional asset classes–stocks and bonds–and often include real estate, infrastructure, private credit, and other alternative assets. These investments play a critical role in reducing volatility, enhancing risk-adjusted returns, and offering exposure to markets that are negatively correlated to public markets.

Unfortunately, for most Canadian retail investors, access to these strategies remains limited, and individuals remain locked into the more traditional 60/40 balanced portfolio.

Fortunately, Harbourfront investors have access to alternative market solutions, available since 2018, and we firmly believe that incorporating these types of assets into a modern portfolio is no longer optional, but rather essential to mitigate risk.

3. Volatility Is the New Normal – Plan Accordingly

Market swings in 2025 haven’t come out of nowhere. Tariff threats, policy reversals, and shifting alliances have replaced the steady, rules-based environment investors once relied on. U.S. assets, once seen as the ultimate safe haven, are now viewed more cautiously. The strong performance of American equities over the past decade was built on global confidence, which is now being questioned.

Investors need to be prepared for continued volatility and recalibrate their expectations around returns. We’re not forecasting doom, but we are emphasizing realism. Flexibility and patience will be more valuable than precision in the months ahead.

4. Stay the Course – Even When the Headlines Say Otherwise

Deglobalization gets a lot of attention. But while political rhetoric may sound protectionist, the structural forces behind globalization remain intact and resilient. Trade patterns are evolving rather than reversing. Even as the U.S. administration takes a more erratic approach to global leadership, other regions, particularly Europe and Asia, are stepping forward.The global economy is not shrinking; it’s rebalancing.

Investors should stay focused on the mid- to long-term outlook. Reacting emotionally to short-term noise is one of the most consistent drivers of underperformance. The portfolios are well-diversified, thoughtfully constructed, and built with your goals in mind. Staying disciplined is often the best move investors can make.

Looking forward to the rest of 2025, investors will be rewarded if they can continue to focus on what they can control: maintaining a diversified approach, looking beyond traditional asset classes, managing their expectations, and maintaining discipline.

After all, investing isn’t about predicting the next “headline or story,” but rather preparing for various outcomes today–rather than reacting tomorrow.

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