Despite pressure from higher oil prices, our current base case remains constructive on US equities in 2026. Yet, history shows that even in strong market years, there can be significant dispersion beneath the surface. In 2025, for example, the index returned 18%, but 72% of S&P 500 stocks fell by at least 10% intra-year. As AI and geopolitical risks rise, this trend has continued in 2026, with 40% of stocks already experiencing intra-year drawdowns of 10%. We believe this environment will create significant opportunities for both tax-alpha and active stock selection.
