TDAM USA Merger

TDAM USA Merger

In 2021, Epoch Investment Partners, Inc. (“Epoch”) and TD Asset Management Inc. (“TDAM”), conducted a strategic review regarding legal entities. To simplify our structure and reduce our regulatory footprint, the decision was made to merge the TDAM USA Inc. (“TDAM USA”) legal entity into the Epoch Investment Partners, Inc. legal entity effective December 31, 2021. This enables us to have Epoch as the one registered investment advisor in the United States. This approach is being reviewed and implemented in other jurisdictions. This is one step of a broader initiative to allow for the global distribution of both TDAM and Epoch strategies in North America, Europe and Asia.

Importantly, this change does not impact the investment management of any portfolios. TDAM investment professionals will continue to provide management services to U.S. clients as Epoch investment professionals. Portfolio managers and investment teams will remain the same, as will the trading team and processes.

Our Perspectives

Of late, people are blaming a variety of economic ills on an unlikely villain: the desire of investors to earn good returns on capital. But, no industry can be expected to survive if it is not creating value for the investors in that industry. Earning good returns on capital is not an obstacle to satisfying consumer demands; it’s what enables companies to continue to satisfy those demands.

Until recently, we had been living in a disinflationary environment that started in the 1980s. We believe three factors – Deglobalization, Demographics and Decarbonization – have led us to a secular reflationary environment. As a result the next decade is going to look quite different than the 2010s, with a number of critical implications for investors.

The transition to net-zero emissions (NZE) involves a fundamental change in the structure of the economy, and will likely be messy, implying periodic supply shortages and even more volatile energy prices. Further, inflation and nominal interest rates will probably be higher and more volatile, especially relative to the levels of the last two decades. This has not yet been priced into markets.

China has launched a new policy framework, “Common Prosperity,” which escalates government steerage of the economy and features two critical initiatives. First, Beijing is taking action to tame the country’s real estate obsession. Second, the “summer blizzard” of regulatory actions has targeted a wide range of tech-related sectors including fintech, social media, online tutoring and gaming. Here, we examine the implications for investors of the pendulum swinging ever further in favor of the state.

The recent surge in start-ups and unicorns reflects the broadening of the digital revolution across industries, and suggests improving productivity and free cash flow. Further, although the digitization of the economy is still in early earnings, we expect digital platforms to represent the majority of market cap by 2025, with tech, health care and communications the most promising sectors.

Inflation risks are at a four-decade high due to today’s combination of a generous Treasury, an overly tolerant Fed, and a reopening economy. While our base-case scenario assumes only a brief period of above-target inflation, investors should brace themselves for more inflation scares, which will likely remain a key driver of equity markets well into 2022.