Current market environment performance of dynamic, risk-managed investment solutions.
Market stalls as uncertainty rises
The first quarter of 2026 began with stocks moving sideways, a trend that has persisted since late last year. Volatility rose as global disputes increased and market valuations stayed high. AI optimism remains but is curbed by uncertainty, so stocks did not climb much over the last quarter. By quarter-end, the S&P 500 had fallen a few percentage points.
Energy was the top sector for the quarter, the only sector to deliver double-digit gains. In contrast, Information Technology, Communication Services, Health Care, Financials, and Consumer Discretionary sectors each posted losses. International equities outperformed domestic equities.
Bonds fell slightly this quarter. The Federal Reserve paused its rate cuts, keeping rates unchanged in January and March after lowering them last December.
Gold stayed strong in the first quarter, in sharp contrast to stock and bond losses. Many of our strategies invest in gold and have benefited from these gains.
Recognizing the stagnating market performance, many of our strategies shifted exposures away from non-defensive positions compared to the end of last year. However, overall positioning remained fairly aggressive at quarter-end. Among our QFC, ETF, and Axos platform strategies:
• 68% of our equity strategies had over 90% in non-defensive asset exposures
• 38% of such bond strategies had over 50% in non-defensive asset exposures
• 95% of our core strategies had over 50% in non-defensive asset exposures
• 86% of our alternative strategies had over 50% in non-defensive asset exposures
So far this year, returns have been better in the alternative space than in equity markets. That is why our strategies have been designed to adjust as conditions change—maintaining exposure when opportunities are present and emphasizing risk management and diversification when momentum pauses. It is also why we recommend diversifying across multiple strategies or using our turnkey strategies, such as our Multi-Strategy Portfolios. These portfolios prepare and reallocate among strategies for you. In markets, as in any competitive environment, long-term success depends less on any single quarter and more on executing a disciplined process through changing conditions.