The S&P 500 and Nasdaq are easing from record highs, but investor sentiment remains upbeat heading into the final quarter of the year. With markets cooling, attention is turning to strategy and select opportunities rather than broad momentum.
BNN Bloomberg spoke with Chris Kerlow, portfolio manager at Canaccord Genuity’s Team LWC, about how he’s positioning portfolios for the months ahead and where he’s finding value in an evolving market landscape.
Key Takeaways
- Investors are rotating from inflation risks to concerns about slower global sales growth.
- Active management is gaining favour as market dispersion widens, reducing reliance on passive investing.
- Portfolios are emphasizing Canadian dividend stocks and international markets over U.S. equities.
- Alternatives such as merger-arbitrage, crypto and commodity-linked assets are being used for diversification.
- Top stock ideas for Q4 include Alamos Gold, Cboe Global Markets and Freeport-McMoRan.
Read the full transcript below:
LINDSAY: The S&P 500 and the Nasdaq appear to be pulling back today from record highs, but that doesn’t mean investors are losing optimism. Let’s get some ideas for a portfolio strategy from Chris Kerlow, portfolio manager at Canaccord Genuity’s Team LWC. It’s good to have you in studio. Thanks for taking the time.
CHRIS: No problem.
LINDSAY: So heading into the fourth quarter, let’s talk about your portfolio strategy and get your thoughts on Canada versus U.S. equities.
CHRIS: Sure. For the first time in my career at Canaccord Genuity, we’ve gone underweight equities. As you showed on that chart, markets have been steadily climbing, though they pulled back a bit today, down about 20 basis points. Between Canada and the U.S., we’ve favoured international stocks most of this year. From a global perspective, Canada is part of that international mix, so we’re slightly more underweight in the U.S. than in Canada, and most overweight in international indices, including emerging markets.
LINDSAY: You mentioned international markets. Apart from Canada and the U.S., what are you looking at globally?
CHRIS: We don’t consider ourselves the best international stock pickers. We focus on Canadian dividend stocks and U.S. growth companies, and we outsource global exposure to top-tier, actively managed portfolio managers with boots on the ground around the world. We’re favouring active management right now over passive strategies. In the past, owning the S&P 500 was a great approach, but we think with more volatility ahead, active management will be able to earn its keep.
LINDSAY: How much are you allocating to bonds at the moment?
CHRIS: We moved up to a neutral bond weight at the end of the summer, but when the U.S. 10-year yield fell from about 4.5 per cent to four per cent, we shifted back to underweight — particularly in credit and high yield. We don’t see a great risk-reward tradeoff there. We do hold some U.S. Treasuries and a bit of U.S. cash-like securities to balance out the diversified portfolio.
LINDSAY: Any alternatives you’re looking at, such as crypto?
CHRIS: We’re almost max overweight in alternatives. It’s become the new bond category for us, especially with liquid alts. That’s given us a chance to explore areas like alternative currencies. We added Solana this summer through ETFs, complementing our Bitcoin position. We also hold CTAs, commodity-linked hedge funds and merger-arbitrage strategies. These offer diversification without the pure beta or systemic risk that can drag down portfolios during market selloffs.
LINDSAY: You’ve also brought a few stock picks today. Let’s go through those. Your first one is Alamos Gold. Gold has been strong lately — what do you like about Alamos?
CHRIS: Alamos is expected to ramp up production to about 600,000 kilograms a year by 2026, with an all-in sustaining cost around US$1,100. With gold at all-time highs near US$4,000, the company’s in a strong position. We added the dual-listed stock to our U.S. Top Picks portfolio because we see upside given its production efficiency, no debt and roughly $250 million in cash. It’s a great opportunity for investors looking for gold exposure.
LINDSAY: It’s down about four per cent — do you still think it’s a buy?
CHRIS: Yes, we’re maintaining a full position. The pullback offers a good entry point.
LINDSAY: Next is Cboe Global Markets. Tell us about that one.
CHRIS: Cboe operates in an oligopoly with two other major players and is the largest options exchange globally, controlling about 50 per cent of the U.S. derivatives market. It’s expanded into Europe and Asia through acquisitions, which are performing well. The company also dominates the fast-growing same-day options market. When volatility spikes — like during the unwinding of the yen carry trade — Cboe sees record trading volumes and revenue. About 35 per cent of its business is recurring, and it’s expanded into digital assets too. It’s a solid counterbalance in our growth-heavy U.S. portfolio.
LINDSAY: And finally, Freeport-McMoRan. What’s the story there?
CHRIS: We trimmed our position over the summer since it wasn’t keeping pace with copper prices. Then in September, a mudslide shut down one of its major mines, and the stock fell about 30 per cent. We used that drop to rebuild a full position. Given how tight copper inventories are — near 10-year lows — losing one of the world’s top-producing mines supports prices. The mine is expected to restart sooner than anticipated, possibly late this year or early next. The stock has struggled to break above US$46, with our target at US$50, so there’s limited upside, but it remains well-positioned.
LINDSAY: Copper is so critical right now, especially with the growth of AI and the tech sector.
CHRIS: Absolutely. It’s not just semiconductors that drive AI — it’s the electricity moving through copper. Each AI data centre uses roughly 12 kilograms of copper per megawatt of capacity. That structural demand should persist for years.
LINDSAY: Great insights, Chris. Thanks for joining us.
CHRIS: Thanks for having me.
LINDSAY: That was Chris Kerlow, portfolio manager at Canaccord Genuity’s Team LWC.
This BNN Bloomberg summary and transcript of the Oct. 9, 2025 interview with Chris Kerlow are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.