Performance Review
The portfolio’s return in Q1 2026 was -0.78%, which outperformed an all-equity benchmark like the Vanguard FTSE All-World, which had a return of -2.7%.
The long-term objective is to compound capital at approximately 7–8% annualized over a full cycle, while limiting drawdowns to a level that allows disciplined decision-making during periods of stress.
Top contributors / detractors during the month:
Contributors: Johnson & Johnson, Gold, Deutsche Boerse, Colgate
Detractors: Global Equities (Vanguard FTSE All-World), Christian Dior SE, Unilever, VISA
Asset Allocation
The portfolio ended the quarter with the following allocation:
Equities: 68%
Diversifying Strategies: 28%
Cash: 3%
Commentary
Overall, I’m quite pleased with the portfolio’s performance. It’s been consistent with my expectations during volatile times. In Q1 interest rates, equities, commodities, and currencies, experienced volatility.
Macro Environment & Winners
A significant portion of the portfolio is invested in USD-denominated equities. The EUR/USD exchange rate fluctuated from a high of 1.20 in February to a low of 1.14 in March. Despite broader market volatility, Gold (priced in EUR) positively contributed to the performance. Within equities, Johnson & Johnson provided stability in the less cyclical healthcare sector, while Colgate served as a reliable staples play. Deutsche Boerse also made a positive impact as the company benefits from heightened market volatility and higher interest rates through its settlement business.
Detractors & Strategic Pivots
One of the major detractors were clearly global equities broadly. Christian Dior showed additional weakness, and I do not anticipate a quick turnaround in the global outlook for luxury stocks. I expect further economic weakness and potential inflation coming from the geopolitical situation in Iran.
Unilever and Visa were also significant detractors. Following the spin-off of its Magnum division in March, Unilever announced its intention to combine its food business with McCormick, while notably retaining its food business in the growing Indian market. Unilever is effectively pivoting toward a pure-play home and personal care business, focusing on higher-growth beauty and wellness markets. Long-term, this strategic shift should enhance focus on core units and potentially re-rate the stock from a forward P/E in the teens to the low twenties.
Visa continued to decline in March amid concerns over slowing consumer spending, the adoption of domestic payment solutions (WERO, Pix), and the future impact of stablecoins. Renowned investor Stanley Druckenmiller recently said in an interview:
“I assume our whole payment systems will be stablecoins in 10 or 15 years, as they are more efficient, faster, and cheaper than existing solutions.”
Despite this, Visa is proactively addressing these shifts, notably by integrating stablecoin settlements. I believe Visa will continue to evolve and embrace technological advancements while maintaining its status as a foundational railway for global spending. I addressed a few issues regarding Visa in the February Update:
Uncorrelated Strategies
The uncorrelated strategies basket performed well, adding 0.8 percentage points to the overall portfolio performance. Major contributors included Gold, BH Macro, and the catastrophe bond fund (insurance risk). Looking ahead, I expect BH Macro to benefit from ongoing volatility. The cat bond fund may provide a more mixed picture, balancing potentially lower short-term rates with a reduced risk premium. I also expect the two quant funds (GAIA and AQR) to positively contribute finally as the year progresses.
Buys & Sells
Visa: Increased the position in February and I will likely add further on weakness.
Blue Balance Global Opportunities Fund: Exited as it was only a minor 1% position. I will reallocate these funds to either AQR or BH Macro to increase portfolio concentration.
Twelve Capital Cat Bond Fund: Trimmed the position to bring the insurance risk allocation back below the 10% threshold. I still believe this asset class offers attractive risk-adjusted returns, and these funds will be redeployed into better opportunities in the coming weeks.
Thank you for reading along, I am looking forward to the next update.
This publication is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Past performance is not indicative of future results.