Craig Basinger, chief market strategist at Toronto-based Purpose Investments Inc. Illustration by Joel KimmelThe Globe and Mail
Unexpected economic shocks aside, money manager Craig Basinger believes the year ahead could be good for investors – if they put their money in the right places.
“2026 has a lot of good things going for it. ... There’s a pretty healthy economic backdrop,” says Mr. Basinger, chief market strategist at Toronto-based Purpose Investments Inc., who oversees about $2.4-billion of the firm’s $30-billion in assets.
He says recession fears are fading as inflation cools and economic momentum picks up in various regions, driven by spending on artificial intelligence and by fiscal spending in sectors such as infrastructure and defence.
The biggest risk for investors, he says, is that a lot of the growth appears to be priced into the market.
“It’s just become harder to find opportunities,” he says, which is why his firm is “mildly underweight” in equities and holding a bit more cash while waiting for buying opportunities.
For his $250-million Purpose Active Balanced Fund, which combines active and passive managers both internally and externally, the allocation is about 57 per cent equities, 31 per cent bonds, 7 per cent “diversifiers,” such as options, and 5 per cent cash.
The ETF series has returned 2.3 per cent year-to-date, as of Jan. 30. Its one-year return is 15 per cent. Since inception in October 2023, the fund has seen an annualized return of 17 per cent. The performance is based on total returns, net of fees, as of Jan. 30.
The Globe spoke with Mr. Basinger recently about equities he’s been buying in two key areas – emerging and international developed markets – and why he trimmed his Canadian exposure:
Why are you bullish on emerging markets these days?
Until 2024, we had no exposure to emerging markets. They’ve been cheap for about 10 years because people previously viewed China, which represents a big chunk of emerging markets, as uninvestable. But we started to see its earnings growth reaccelerate, which piqued our interest. Emerging markets now make up 10 per cent of the fund’s equities compared to the baseline of 5 per cent.
We first bought Vanguard FTSE Emerging Markets All Cap Index ETF VEE-T in May, 2024. Then, in September, 2025, we added Invesco S&P Emerging Markets Low Volatility ETF EELV-A. Both are passive ETFs. VEE has more exposure to technology in China and Taiwan, while EELV provides more exposure to places such as Saudi Arabia, South Africa, the Philippines and Indonesia.
We paired the two funds to achieve balance in emerging markets. We’re positive on the space. The earnings growth is great. Valuations are still pretty appealing. Their central banks have been ahead of the curve on inflation and cutting interest rates afterward, which has given them more credibility. Many emerging markets are also commodity-driven, which we find appealing as it provides a stabilizer for currencies. Inflows into emerging markets have been strong after a decade-plus of being under-owned.
You’re also bullish on developed countries outside North America. Explain why.
We’ve been overweight international equities for a few years. They now account for about 42 per cent of the fund’s equities, up from a baseline of 35 per cent. While the U.S. economy still dominates, earnings growth in developed international markets has begun to accelerate in places such as Europe and Japan.
Japan’s economy certainly has challenges from debt, demographics and decades of underperformance, but the weak yen makes it attractive. Also, Japanese corporations are becoming more shareholder-friendly, leading to rising return on equity and improved governance, which we believe will help re-rate equities in Japan.
We have pure Japanese exposure with a small position in iShares MSCI Japan ETF EWJ-A, a passive fund, and more exposure through the actively managed Purpose International Dividend Fund ETF PID-T. As the name implies, the fund has exposure to dividend payers in major developed economies outside of North America, including the United Kingdom, Europe and Australia.
We also own iShares Core MSCI EAFE ETF IEFA-A, a passive fund that invests in more than 2,000 large-, mid- and small-capitalization stocks outside the U.S. and Canada. We have owned these three ETFs since launching the Purpose Active Balanced Fund.
Where have you been trimming?
We reduced our exposure to Canada down to about 29 per cent from our baseline of 35 per cent in the equity portion of the portfolio.
I think Canada is awesome and believe that investors should continue to have a decent exposure to the country. Last year was great, with outperformance from materials, specifically gold, and financials. I just think those gains will be harder to come by this year.
Energy and industrials are off to a good start in 2026, but we continue to have a large global oil surplus, and industrials could be at risk with the pending renegotiation of CUSMA [Canada-United States-Mexico Agreement]. I just think it will be challenging for the TSX to keep pushing higher this year.
As a result, we trimmed our exposure to BMO S&P/TSX Capped Composite Index ETF ZCN-T last fall. If we do get a flare-up on CUSMA that causes some weakness in Canada, we may use some of our cash to increase our Canada weighting.
This interview has been edited and condensed.