Canada's infrastructure promise is real, but timelines and capital remain the hard part, says Craig Ellis
Each month at BPM, we offer a slate of articles and content pieces that go deep on a particular topic. This month, we're exploring alternatives as an asset class, with a focus on infrastructure in institutional portfolios.
The last three years of market-cap-weighted index dominance by a narrow group of stocks may be giving way to something more balanced.
After all, Craig Ellis believes the early weeks of 2026 are already proving to be optimistic which could end up paving way for a stronger Q1 and beyond.
“Market cap-based indices like the TSX and S&P 500 really dominated by a small group of companies, obviously technology in the US predominantly, and in Canada, probably the banks. And then precious metals have both really dominated returns,” noted Ellis, chief investment officer at Bellwether Investment Management. “We've been of the view that we'd like to see the market broaden out. While some of the sectors have lagged, hopefully those sectors start to take flight. And so far, we've seen certainly a shift in that just in the first five or six weeks of 2026 where sectors like energy, consumer staples, industrials that really hadn't performed as well are now leading the market.”
Looking ahead to the near future, Ellis sees natural gas and nuclear as the sectors closest to delivering returns for investors. In both cases, Canada has existing infrastructure, operational experience, and completed projects like the Coastal GasLink pipeline that allow for expansion without starting from zero.
He also credits the Carney government with finally paying attention to the country's resource potential and the export opportunities that come with it.
However, critical minerals, on the other hand, present a longer road, he suggests. While the strategic rationale is clear and the resources are in the ground, he believes the sector has been overlooked for years and remains dominated by smaller, junior companies that lack the capital to build out the required infrastructure like mine shafts, roads and port capacity.
According to Ellis, Canada’s ambition to lead in critical minerals is constrained by time and infrastructure. The ore may be in the ground, but the sector lacks the mines, roads and port capacity needed to scale, and the country has not seriously developed it yet.
Contrastingly, nuclear and natural gas already have established infrastructure and operating experience, so growth there is largely about expansion rather than building from scratch. In his view, critical minerals remain a relatively immature space that will take years of sustained investment before it becomes comparable. Yet, he still expects consolidation will eventually draw in larger players, perhaps major gold miners looking to diversify or a company like Anglo American following its acquisition of Tech Resources, but meaningful progress is likely years away.
Ellis sees energy demand as a durable theme, driven by the sheer scale of capital the hyperscalers are pouring into data center buildouts. While questions are emerging about how quickly those companies will see a return on their massive capex, he suggests the pace of construction shows no signs of slowing.
However, the bottleneck isn’t just generation capacity - it’s also the grid, he suggests.
"Our entire electrical grid in North America is somewhat antiquated and certainly doesn't have the capacity to handle the energy needs that we're going to need as a society," he said, adding that renewable power will continue to grow, though US policy decisions have taken some of the shine off the sector.
In the meantime, demand for energy is source-agnostic as some hyperscalers are bypassing the grid entirely by contracting directly with power generators to supply individual data centers. As a result, he expects companies involved in energy distribution and transmission to remain in demand.
"People are looking for energy in whatever form they can take it as quickly as they can," he added.
Yet, Ellis believes Canada still has meaningful upside in technology despite having only a handful of large, listed players, pointing to regional hubs like Waterloo and Ottawa as underused assets that could re-emerge as tech leaders. The current focus on data centre buildouts and chip production misses the larger prize, Ellis suggests, applying AI to real-world use cases in business and consumer markets to lift productivity and quality of life.
He believes Canada’s depth of technical talent positions it to compete with the US and leading European markets in this next phase, which will be defined less by infrastructure and more by how effectively AI is embedded into applications. After all, he acknowledged Canada has the resource base to become a strategic supplier in the AI and energy cycle but cautions against overestimating the speed at which that can happen.
"You just can't sort of snap your fingers and all of a sudden double your LNG capacity," he said. “It’s the same thing with critical minerals. It's not a question of whether we have the resources. It's how quickly can we sort of get them into production and develop agreements with other countries to sell to,” Ellis added, noting that infrastructure has been flagged as a growth priority before, and previous governments failed to follow through on the country's potential.
While the Carney administration's nation-building agenda makes strategic sense in his view, execution remains the open question.
"The government's going to have to work with both private and public companies and foreign investors to really take these projects into reality and turn them into profitable ventures,” added Ellis. “That's not going to happen overnight. To some degree, Canada has been somewhat neglected by a lot of foreign capital over the last number of years for different reasons. But obviously, Prime Minister Carney seems to be making a substantial effort to rebuild some ties with different countries. I think that's really going to be a big plus for Canada going forward.”
