Our 2026 Market Outlook

Every January, our investment committee steps back from day-to-day positioning to ask a simple question: what has to be true for markets to surprise us this year? Below is a summary of where we landed for 2026.

Rates have peaked, but "higher for longer" is still the base case

We don't expect a return to the near-zero rate environment of the 2010s. Instead, we're planning around a policy rate that drifts gradually lower while staying well above its pre-pandemic norm. That has a few implications:

• Fixed income carries its weight again. For the first time in over a decade, high-quality bonds offer a yield worth holding for its own sake, not just as a volatility dampener.
• Duration risk cuts both ways. We're keeping duration moderate across our income strategies rather than making an aggressive bet in either direction.
• Dispersion within equities should widen. Companies that relied on cheap financing to mask weak unit economics will have a harder time hiding it.

Three themes we're watching

1. Reshoring and industrial capex. Supply chain resilience has gone from a talking point to a capital allocation priority for many of the companies we follow.
2. AI-driven productivity, unevenly distributed. We think the earnings impact will show up first in sectors with high labor intensity and digitizable workflows — and later, if at all, elsewhere.
3. Fiscal policy as a market driver. Government spending decisions are increasingly moving markets in ways that used to be the sole domain of central banks.

What this means for our funds

Our Global Growth Equity Fund remains concentrated in companies we believe can compound through a range of rate environments. The Strategic Income Fund has modestly extended duration to lock in today's yields, while our Balanced Allocation Fund keeps its equity sleeve tilted toward quality.

We'd rather be early and disciplined than reactive and late. Positioning changes at the margin, not the mandate.

As always, we'll revisit this outlook as the year unfolds and update clients directly if our thinking shifts materially.