Markets opened higher as investors remained hopeful about progress toward a potential U.S.-Iran agreement, with attention focused on the reopening of the Strait of Hormuz and the outlook for oil prices.
BNN Bloomberg spoke with Chhad Aul, chief investment officer and head of multi-asset solutions at SLGI Asset Management, about using Canadian energy stocks as a hedge against geopolitical risks, the outlook for technology shares and the sectors he currently favours in the market.
Key Takeaways
- Canadian energy stocks can provide a hedge against geopolitical risks and higher oil prices while also offering diversification within equity portfolios.
- The Canadian energy sector could benefit from supportive government policy, improved market access and renewed foreign investment interest over the longer term.
- Investors have become more selective around mega-cap technology companies, closely scrutinizing AI-related capital spending and paths to returns on investment.
- Consumer discretionary stocks could benefit in the near term from the recent market rally, while consumer staples may become more attractive later if inflation pressures persist.
- Real estate stocks may benefit if bond yields move lower, while some investors remain cautious on parts of the technology sector after strong gains in semiconductors.
Read the full transcript below:
LINDSAY: Markets opened higher today as investors continue to wait for updates on the U.S.-Iran peace deal but remain optimistic. Our next guest says reopening the Strait of Hormuz seems to be an achievable goal but suggests using energy stocks to hedge against this risk. Joining us now is Chhad Aul, chief investment officer and head of multi-asset solutions at SLGI Asset Management. It’s great to have you join us. Thanks so much.
CHHAD: Great to be here.
LINDSAY: How are you using Canadian energy stocks to hedge against these geopolitical risks we’re seeing right now?
CHHAD: The Canadian energy sector gives you a couple of benefits. Certainly in the near term, having exposure to the energy complex in some form — it could be through direct investments in commodities — but through energy stocks, you’re getting some exposure to upside if this war were to drag on further or if the Strait were to remain closed for a prolonged period of time.
You’re getting that offset. The energy sector tends to perform well when we’re in a bit of a risk-off environment in terms of developments around the war. Then, from a longer-term perspective, even with a reopening of the Strait, we’ve now seen how easily that can be used as a tactic for negotiation. You’re likely going to continue to see a higher oil price persist. You can see that risk premium in oil prices, and it makes the energy sector more attractive on a longer-term basis.
Specifically for Canada, there is government policy that is making the sector more attractive, getting investment going again, making it more attractive to foreign investors and making it easier to get product to market. There are many things going for the Canadian energy sector over both the short and longer term.
LINDSAY: That’s what I was going to ask too, because beyond using Canadian energy stocks as a hedge right now, it sounds like you see them as a good long-term play as well.
CHHAD: That’s right. It’s helpful when an investment idea works over multiple time frames, and certainly that is one that we see. It’s also a relatively clean way to play the sector while getting some diversification benefits relative to the broader risks in a portfolio.
LINDSAY: Let’s switch gears now and talk about mega-cap tech stocks. A lot of them had strong results in the latest quarter, but you say this wasn’t reflected in their stock performance. What do you mean by that?
CHHAD: We’ve seen yet another quarter of very strong earnings and positive surprises. Broadly speaking, the best results from an earnings perspective were once again among those technology stocks, the AI hyperscalers and the mega-cap companies.
But we’ve also seen investors become very careful in watching how high capital spending has become and in assessing which companies have a clearer path to getting a return on that investment versus others where there is much more uncertainty. With high valuations and significant spending, we actually didn’t see many of those companies perform as well from a share-price perspective, even though the earnings were still there.
That dynamic has continued for a few quarters now, but it also suggests that this AI infrastructure build-out is not necessarily in bubble territory because investors are still asking tough questions and being careful about where that massive amount of spending is being put to work.
LINDSAY: Do you think now is a good time to invest more in the tech sector?
CHHAD: The tech sector is interesting because there are a lot of themes playing out within it. So far this year, the big winner has shifted from the semiconductor area — particularly companies tied to GPUs that power AI — toward the memory chip area, which had previously been unloved but has delivered massive returns as scarcity has increased.
At the same time, there are parts of the technology market that are being disrupted by AI. Many software companies, for example, have struggled because those industries are more exposed to the AI disruption theme.
I think investors need to pick their spots within technology. The AI infrastructure build remains an area where there is still room for growth, particularly where scarcity still exists. But you also have to be careful on a company-by-company basis with firms that could potentially be disrupted by the use of AI.
LINDSAY: You are also optimistic on consumer discretionary. Why is that at a time when higher prices, especially higher gas prices, are weighing on consumer sentiment?
CHHAD: That would be more of a near-term play. If you look at this relief rally and broader risk rally that we’ve had, one higher-beta area that hasn’t fully participated has been consumer discretionary, particularly discretionary services. I do think there will be some resilience there in the near term.
But as we move further into the year and into more of a medium-term outlook, I do think there will be a pivot toward the defensiveness of consumer staples, where consumers dealing with higher prices will focus more on spending on essentials.
So there are two time frames at play. But I do think there is an opportunity for discretionary stocks to play catch-up with this recent risk-on rally.
LINDSAY: You’re also bullish on real estate. Tell us why.
CHHAD: This is mostly a play on the interest-rate environment. Real estate stocks tend to perform better when interest rates are falling. We’ve seen inflation concerns and higher oil prices push bond yields close to their year-to-date highs as markets reset expectations around Federal Reserve rate cuts.
I think there is downside from here in yields, and the real estate sector would benefit as yields come off those highs. It also provides diversification from some of the other sector plays we discussed and could perform well if yields continue to drift lower.
LINDSAY: Lastly, on the flip side, what sectors are you underweight right now?
CHHAD: One area we’re relatively underweight in is technology, which gets back to one of our earlier points. We prefer some of the other sectors we’ve discussed because of the disruption theme affecting parts of tech.
Semiconductors have had a massive run so far this year, and I think they may be due for a pause. There are also still concerns around hyperscalers and large-cap technology companies. I think there will be opportunities to put money back to work in technology later, but right now we’re waiting that out and favouring some of these other sectors instead.
LINDSAY: We’ll leave it there. Chhad Aul, chief investment officer and head of multi-asset solutions at SLGI Asset Management. Appreciate your time. Thanks so much.
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This BNN Bloomberg summary and transcript of the May 7, 2026 interview with Chhad Aul 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.
