A New Year Begins with Uncertainty

The start of 2026 has reminded investors that markets rarely move in straight lines. January was shaped by a mix of geopolitical developments, shifting expectations around artificial intelligence, and ongoing adjustments in global interest rate expectations.

One of the most widely discussed developments was the escalation of tensions involving Iran in the Middle East. While geopolitical events often create short-term volatility, energy markets tend to respond quickly given the region’s importance to global oil supply.

West Texas Intermediate (WTI) futures spiked over ~US$100/barrel intraday in early March, a move of over 65% from late February levels, as investors assessed risks around the Strait of Hormuz, a corridor that handles ~20% of global petroleum liquids. This type of move tends to tighten financial conditions and revive inflation concerns.

For investors, the ripple effects are broad. Higher oil prices can influence inflation expectations, which in turn affects central bank policy, bond yields, and equity valuations. For Canada, the dynamic is somewhat unique as the energy sector represents a meaningful portion of the domestic equity market, providing a degree of offset relative to other global markets when energy prices rise. Other nations benefiting would include countries like Norway and Russia. Notably, if high oil prices persist, Russia will have enhanced financial capability to continue to fund the war in Ukraine. 

The month also highlighted a shift occurring within technology markets. Over the past several years, enthusiasm around artificial intelligence has driven substantial capital investment across semiconductors, cloud infrastructure, and enterprise software. Recently, however, some software-as-a-service companies have experienced notable pullbacks as investors reassess valuation levels, pricing power, margins, and potential business model transitions.

Despite uneven leadership across global markets, the Zelos model portfolios continued to produce steady results over the past year. As at January 31, 2026, one-year returns ranged from approximately 6.1% to 7.1% depending on the mandate.

While the absolute level of returns is important, we believe the consistency and risk profile of these portfolios is equally meaningful. Since inception in early 2019, the portfolios have delivered competitive long-term returns while maintaining lower volatility than many broad equity benchmarks.

Zelos Model Portfolio Update

Despite uneven leadership across global markets, the Zelos model portfolios continued to produce steady results over the past year. As at January 31, 2026, one-year returns ranged from approximately 6.1% to 7.1% depending on the mandate.

While the absolute level of returns is important, we believe the consistency and risk profile of these portfolios is equally meaningful. Since inception in early 2019, the portfolios have delivered competitive long-term returns while maintaining lower volatility than many broad equity benchmarks.