First Quarter 2026 Newsletter
- May 15
- 4 min read
Market Commentary
Financial markets delivered mixed results in the first quarter, as investors navigated a backdrop of rising volatility amidst changes in investor sentiment and geopolitical escalation.
While the economic data has held up reasonably well, uncertainty around global economic policy direction contributed to volatility and performance dispersion across asset classes and sectors.
Here are the key quarter and YTD market highlights:
Equities
S&P 500: -4.4% / -4.4%
TSX 60 +3.0% / +3.0%
Global Equities: -1.2% / -1.2%
Bonds
US Bonds: +0.0% / +0,0%
Canadian Bonds: +0.2% / +0.2%
High Yield: -0.4% / -0.4%
Balanced Portfolios
Global 60/40: +0.3% / +0.3%
While geopolitical events can influence markets over short-term horizons, they are inherently difficult to predict or position around with precision. As such, our focus as always continues to rely on structuring portfolios to withstand a broad range of potential outcomes as opposed to reacting to individual events.
Fortress Portfolio Positioning and Outlook
The Anchor Pacific Fortress Portfolios are constructed with the objective of delivering consistent, long-term outcomes across the range of potential market environments. We operate from a single core investment model and tailor asset allocation and investment selection based on each client’s unique risk tolerance, time horizon, and capacity for short-term uncertainty.
During the first quarter, our portfolio activity was measured and deliberate. While overall positioning continues to reflect a balanced and diversified structure, we implemented a series of incremental refinements designed to enhance the portfolio’s resilience in the current environment.
Most notably, we modestly increased exposure to international equities and real assets, including broad commodities and companies involved in their production. These adjustments reflect our ongoing focus on broadening sources of return and strengthening diversification across different economic regimes.
These changes were funded through a reduction in core fixed income and hedge strategy exposures, where we continue to evaluate the evolving role of traditional defensive assets in a landscape characterized by shifting correlations and persistent macro uncertainty.
Importantly, these adjustments should be viewed as refinements rather than directional shifts. The portfolio remains anchored in its long-term strategic asset allocation, with changes implemented incrementally and with a clear focus on maintaining balance, managing risk, and achieving appropriate returns.
Our present asset allocation for the Fortress Balanced Model Portfolio which targets an asset mix of 40% higher-risk assets, 40% medium-risk assets, and 20% defensive assets, is below.
The following chart shows how the portfolio’s asset sector composition changed from the most recent year.
Investment Process
In our most recent letters, we have shared our investing first principles, how those principles form the foundational pillars that underpin our investment philosophy and translate to a disciplined, repeatable and resilient investment process.
At its core, successful long-term investing is driven not by short-term market views, but rather the strength of the framework used to make decisions. This includes a clearly defined governance structure, alignment with each client’s goals and objectives, and a Strategic Asset Allocation (the “SAA”) designed to deliver the highest expected return with an appropriately defined level of risk.
Portfolio management is an ongoing process that leverages the SAA in an ongoing process that integrates:
Investment selection, or the process whereby specific investment and strategies are researched and evaluated for portfolio inclusion (answers the question of “what and how much we will we own?”)
Portfolio construction, or the process whereby asset classes, strategies, and other discrete investment opportunities are evaluated in combination with one another, and culminates with the selection of the specific investments that comprise the investment portfolio (answers the question of “what role will each investment play in the total portfolio and how will it interact with the other investments held?”)
Risk management, or the process whereby portfolio risks are measured, monitored and evaluated to determine what future actions are necessary to fortify the portfolio (answers the question “what adjustments need to take place given the current environment?”)
These elements operate together as part of a continuous cycle, allowing portfolios to thoughtfully adapt while firmly anchored in long-term objectives.
Looking Ahead
We are focused on several key themes as we move further into 2026:
Geopolitics and particularly their impact on commodities and global supply chains
Economic activity, inflation dynamics and interest rate expectations
Fiscal policy and government debt levels
Stock and bond correlations
Equity valuations across regions and industry sectors
AI, Software-as-a-Service (“SAAS”), and private market debt and equity
Debasement of the US dollar
Rather than attempting to predict how any single risk factor will unfold or make some type of macroeconomic market call, our emphasis resides in managing portfolios that are resilient by design – capable of absorbing shocks, adapting to changing conditions, and compounding steadily over time. This consistency of process remains our greatest edge.
All future portfolio adjustments will be incremental and purposeful, reflecting our core belief that intentional disciplined refinement wins over reactionary changes every time without exception.
Closing Thoughts and Looking Ahead
Uncertainty is highly likely to remain a constant as market conditions and prevailing narratives evolve and change course. Yet, our commitment to a deliberate structured and battle-tested investment process, rigorous risk management, and long-term stewardship of your capital will never change.
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