Navigating 2026: Risk-Aware and Disciplined Positioning Beyond Traditional Beta

Despite geopolitical risks, tariff concerns, inflation pressures, a government shutdown, and labor market softness, equities delivered strong gains in 2025. Leadership broadened as international markets led performance alongside mega-cap strength, AI-related optimism, and interest rate cuts. The S&P 500 Index gained roughly 18% for the year, marking its third consecutive year of double-digit gains, while recording 39 all-time highs. Notably, international developed equities (+34.7%) led gains, followed by emerging market equities (+25.6%) and US growth (+22.1%). Bonds fared well as high yield credits rose 8.8%, 7-10 year US Treasuries gained 8.0%, and investment grade corporates increased 7.8%. Aside from crude oil (-8.5%), commodities produced positive returns as silver was up 144.7%, gold rose 63.7%, and broad-based commodities increased 14.9%.