Beyond the Portfolio

As summer arrives, we've been reflecting on a busy and rewarding past quarter.

One of the highlights was our recent Succession Simplified seminar. Estate planning is a topic that many people know they should address, yet it is often pushed to the bottom of the priority list. The reality is that without a well-structured estate plan, a significant portion of your wealth can be lost to taxes, potentially making the CRA one of the largest beneficiaries of your estate.

We had a great turn out which was very encouraging to see. While estate and succession planning aren't always easy topics to talk about, they're some of the most important conversations families can have. Keep an eye out in your inbox for future seminar invitations!

We've also had the opportunity to spend time in the community, whether supporting the T.H.R.I.L. charity golf tournament or partnering with the Peterborough Dental Association for an educational planning event. Building relationships and sharing knowledge outside the office continues to be one of the most enjoyable parts of what we do.

And speaking of golf, Steve recently achieved something he had been waiting 25 years for… a second hole-in-one! Even more special, it happened while playing with a group of friends he first met as a staff at Red Pine, a family camp Steve has been attending for 50 years!

Global Markets Stabilize Amid Geopolitical Uncertainty

The Recovery

After a sharp 9% decline in the S&P 500 triggered by U.S./Israel-Iran tensions, major global equity markets have rebounded strongly. The S&P 500 and Nasdaq have posted new all-time highs, with markets regaining losses in just 10 trading days—a sharp reversal that suggests investor confidence in near-term conflict resolution.

The 12-Month Outlook

RBC Capital Markets' U.S. Equity Strategy team projects a price target of 7,750 for the S&P 500 by May 2027 (approximately 7% above current levels). This forecast hinges critically on U.S. GDP growth, with consensus estimates at 1.9%. Historical data shows that when GDP growth stays between 1.1–2.0%, markets typically deliver mid-single-digit returns. However, growth above 2% correlates with returns near 10%—a more attractive scenario.

The Critical Variable: The Strait of Hormuz

The trajectory for the global economy over the next 12 months depends almost entirely on reopening the Strait of Hormuz.

A quick resolution could mean:

• Lower oil prices and inflation
• Central banks holding steady
• Stronger consumer spending and business confidence
• Avoided recessions in Europe and Asia

A prolonged conflict risks delayed reopening into the second half of 2025, potentially causing entrenched inflation, higher rates, and slower global growth.

Source: Bloomberg

The Bottom Line

Despite near-term volatility, major economies show strong recovery potential across all scenarios. Our recommendation: maintain neutral equity exposure aligned with your long-term investment targets. While market timing remains uncertain, the economic fundamentals support staying invested for those with appropriate risk tolerance.

Understanding CRM3: A New Era of Fee Transparency

You may have recently heard about CRM3 and wondered what it means for you as an investor.

CRM3, which stands for Client Relationship Model – Phase 3, is a new regulatory initiative designed to provide investors with greater transparency regarding the costs associated with their investments.

Starting in 2027, investment firms will provide more detailed reporting that clearly outlines investment-related fees and expenses that were previously disclosed in fund documents but not reported directly on client statements.

The goal is simple: to help investors better understand the costs associated with their investments and make more informed decisions.

The most important thing to understand is that CRM3 does not introduce new fees. Rather, it changes how existing costs are presented and disclosed.

As these changes are implemented, you may notice additional information on account statements and reporting documents that provides greater detail about the costs associated with your investments. While the reporting may look different, the underlying objective is greater transparency.

Before (CRM2): Like getting the final bill at a restaurant – you see what you paid, but not the detailed breakdown of where each charge comes from.

Now (CRM3): Like receiving an itemized receipt that shows exactly what you're paying for: the main course, the chef's special preparation, and all the ingredients involved.

What does this mean for clients?

Looking Beyond the Cost

While understanding costs is important, we believe it is only one part of the conversation.

When evaluating any service, the more meaningful question is not simply, "What does it cost?" but rather, "What value am I receiving in return?"

CRM3 encourages investors to have a clearer understanding of both sides of that equation. Greater transparency helps investors better understand what they pay, while also creating an opportunity to better understand the advice, planning, guidance, and support they receive along the way.

We welcome these changes and the conversations they will encourage. If you have questions about CRM3 or the information you may begin to see on future statements, please don't hesitate to contact our team.

Timeline: When to Expect Changes

January 1, 2026: Data collection for CRM3 begins. Any funds held in your account on this date will have expenses included in your CRM3 report.

Mid-January 2027: You'll receive your first comprehensive CRM3 report, displaying all costs for the 2026 calendar year with complete fee transparency.

Ongoing: Performance requirements remained unchanged — CRM3 simply provides more detailed cost information alongside the performance data you already receive.

Why this matters for you?

✓ Greater transparency: You'll have a clearer view of the fees and expenses associated with your investment holdings.

✓ Better comparisons: Consistent reporting can make it easier to compare investment options and understand the costs associated with different solutions.

✓ More informed conversations: Enhanced disclosure creates an opportunity for more meaningful discussions about your investments, financial plan, and the value you receive from professional advice.

The Henderson Capital Management team.

Stephen L Henderson | Senior Portfolio Manager |Henderson Capital Management | RBC Dominion Securities Inc. | 60 Hunter Street East, Peterborough, ON K9H 1G5 | Telephone  (705) 743-4378  or 1-800-429-9507| Fax (705) 743-4516 

Sarah Sackville | Associate Advisor | Henderson Capital Management | RBC Dominion Securities Inc. | T. 1-800-429-9507 | D. 705-743-4492 | F. 705-743-4516 | 60 Hunter Street East, Peterborough, ON K9H 1G5

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor... RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence. © 2026 RBC Dominion Securities Inc. All rights reserved.