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The Growth Portfolio finished the year up 28.0%, the American Growth Portfolio finished up 28.3%, while the Income Portfolio finished up 1.7%.
As we enter 2026, our core view remains that markets are operating within a broader de-risking environment.
Large institutional investors appear to be gradually reducing exposure to risk assets amid tightening liquidity, elevated valuations, and ongoing macro uncertainty. In contrast, retail and do-it-yourself investors remain heavily allocated to equities, with cash balances and equity exposure near levels last seen at the 2021 market peak. At the same time, portfolio margin has expanded meaningfully over the past year, underscoring a renewed increase in speculative activity and leaving markets more vulnerable should conditions deteriorate.
While the S&P 500 managed to push to a marginal new high late in December, this move has not been confirmed by underlying leadership. Many of the market’s most important large-cap and technology stocks remain below their October peaks, consistent with our prior view that new highs were possible within a broader risk-off regime. Critically, the advance has not been accompanied by the characteristics typically associated with a durable new leg higher. We have not seen a meaningful breadth thrust since April 2025, nor sustained leadership from large-cap growth, nor a material acceleration in net equity inflows.
Recent strength in more cyclical areas of the market, including value and small- and mid-cap stocks, appears less reflective of a genuine economic rotation and more consistent with institutional deleveraging. In a passive-dominated market, slowing inflows often lead professional managers to reduce exposure by trimming crowded large-cap and higher-quality positions while covering short positions in smaller, lower-quality companies. This process can create the appearance of improving breadth, but historically it has been a signal of tightening liquidity rather than strengthening growth. In a truly improving economic environment, large-cap leaders would typically be advancing alongside smaller companies, which is not what we are observing today.
We are also seeing evidence of repositioning beneath the surface. Record-sized trades in major exchange-traded funds, combined with elevated activity in off-exchange “dark pool” venues, suggest that exposure is being adjusted quietly and incrementally. These channels allow institutions to manage risk with minimal impact on headline index levels, reinforcing our view that the apparent stability in markets may mask ongoing selling.
Despite these building tensions, market volatility remains unusually subdued. This calm appears less a reflection of broad investor confidence and more the result of short-term dynamics in the options market. Heavy call option activity forces dealers to buy underlying equities to hedge their own exposure, creating a mechanical source of demand that can temporarily pin prices near current levels. While this dynamic can dampen volatility in the short term, it is inherently fragile, as it depends on continued options activity rather than durable long-term investment flows.
More importantly, this same dealer positioning suggests that downside support is relatively thin below current prices, with limited structural demand until markets are meaningfully lower. Should options-driven support fade or volatility return, prices could adjust more quickly than many investors expect. Historically, periods of apparent calm combined with growing internal strain have often preceded sharper and faster market declines.
Consistent with our prior commentary, we continue to see the risk of material downside in equities during 2026, with the potential for a 15% to 35% drawdown depending on how liquidity, positioning, and economic conditions evolve. From a strategic perspective, this argues for continued emphasis on capital preservation, liquidity, and flexibility as markets navigate what increasingly resembles a late-stage distribution process.
At the same time, we acknowledge that markets have thus far proven more resilient than anticipated. Despite the structural and liquidity-related risks outlined above, equity prices have continued to hold up better than our base-case scenario implied. As always, price is the ultimate arbiter, and while we remain cautious, we are mindful that markets can sustain periods of strength even within fragile or late-stage environments. Recognizing this resilience is an important part of disciplined risk management.
That said, we are not adjusting portfolio positioning at this time. We believe our positioning remains appropriate given the balance of risks. While it is important not to argue with price, it is equally important not to chase markets that lack the underlying characteristics of a durable advance. For now, we believe patience is warranted as we allow additional data and market signals to develop.
Should market conditions evolve in a way that confirms either sustained improvement or a meaningful shift in liquidity, positioning, or leadership, we are prepared to adjust exposure accordingly. Until then, our focus remains on managing risk prudently, remaining adaptable, and ensuring we are well positioned to respond decisively to opportunities and risks.
Model Portfolio Highlights
Growth Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
American Growth Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Income Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Our approach targets opportunities with a significant margin of safety with minimal risk of permanent loss. Patience remains essential in realizing long-term gains.
Our clients are typically households with more than $1million in investable assets who value proactive risk management, clear communication, and a disciplined approach to growth. If you know someone who might benefit from this perspective, feel free to forward this note. If you have questions or would like to schedule a conversation, please be in touch.
Thank you for your continued trust.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book time with Ben W. Kizemchuk: Portfolio and Plan Review
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
Market Commentary
January 2026 Update
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The Growth Portfolio finished the year up 28.0%, the American Growth Portfolio finished up 28.3%, while the Income Portfolio finished up 1.7%.
As we enter 2026, our core view remains that markets are operating within a broader de-risking environment.
Large institutional investors appear to be gradually reducing exposure to risk assets amid tightening liquidity, elevated valuations, and ongoing macro uncertainty. In contrast, retail and do-it-yourself investors remain heavily allocated to equities, with cash balances and equity exposure near levels last seen at the 2021 market peak. At the same time, portfolio margin has expanded meaningfully over the past year, underscoring a renewed increase in speculative activity and leaving markets more vulnerable should conditions deteriorate.
While the S&P 500 managed to push to a marginal new high late in December, this move has not been confirmed by underlying leadership. Many of the market’s most important large-cap and technology stocks remain below their October peaks, consistent with our prior view that new highs were possible within a broader risk-off regime. Critically, the advance has not been accompanied by the characteristics typically associated with a durable new leg higher. We have not seen a meaningful breadth thrust since April 2025, nor sustained leadership from large-cap growth, nor a material acceleration in net equity inflows.
Recent strength in more cyclical areas of the market, including value and small- and mid-cap stocks, appears less reflective of a genuine economic rotation and more consistent with institutional deleveraging. In a passive-dominated market, slowing inflows often lead professional managers to reduce exposure by trimming crowded large-cap and higher-quality positions while covering short positions in smaller, lower-quality companies. This process can create the appearance of improving breadth, but historically it has been a signal of tightening liquidity rather than strengthening growth. In a truly improving economic environment, large-cap leaders would typically be advancing alongside smaller companies, which is not what we are observing today.
We are also seeing evidence of repositioning beneath the surface. Record-sized trades in major exchange-traded funds, combined with elevated activity in off-exchange “dark pool” venues, suggest that exposure is being adjusted quietly and incrementally. These channels allow institutions to manage risk with minimal impact on headline index levels, reinforcing our view that the apparent stability in markets may mask ongoing selling.
Despite these building tensions, market volatility remains unusually subdued. This calm appears less a reflection of broad investor confidence and more the result of short-term dynamics in the options market. Heavy call option activity forces dealers to buy underlying equities to hedge their own exposure, creating a mechanical source of demand that can temporarily pin prices near current levels. While this dynamic can dampen volatility in the short term, it is inherently fragile, as it depends on continued options activity rather than durable long-term investment flows.
More importantly, this same dealer positioning suggests that downside support is relatively thin below current prices, with limited structural demand until markets are meaningfully lower. Should options-driven support fade or volatility return, prices could adjust more quickly than many investors expect. Historically, periods of apparent calm combined with growing internal strain have often preceded sharper and faster market declines.
Consistent with our prior commentary, we continue to see the risk of material downside in equities during 2026, with the potential for a 15% to 35% drawdown depending on how liquidity, positioning, and economic conditions evolve. From a strategic perspective, this argues for continued emphasis on capital preservation, liquidity, and flexibility as markets navigate what increasingly resembles a late-stage distribution process.
At the same time, we acknowledge that markets have thus far proven more resilient than anticipated. Despite the structural and liquidity-related risks outlined above, equity prices have continued to hold up better than our base-case scenario implied. As always, price is the ultimate arbiter, and while we remain cautious, we are mindful that markets can sustain periods of strength even within fragile or late-stage environments. Recognizing this resilience is an important part of disciplined risk management.
That said, we are not adjusting portfolio positioning at this time. We believe our positioning remains appropriate given the balance of risks. While it is important not to argue with price, it is equally important not to chase markets that lack the underlying characteristics of a durable advance. For now, we believe patience is warranted as we allow additional data and market signals to develop.
Should market conditions evolve in a way that confirms either sustained improvement or a meaningful shift in liquidity, positioning, or leadership, we are prepared to adjust exposure accordingly. Until then, our focus remains on managing risk prudently, remaining adaptable, and ensuring we are well positioned to respond decisively to opportunities and risks.
Model Portfolio Highlights
Growth Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
American Growth Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Income Portfolio: We hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Our approach targets opportunities with a significant margin of safety with minimal risk of permanent loss. Patience remains essential in realizing long-term gains.
Our clients are typically households with more than $1million in investable assets who value proactive risk management, clear communication, and a disciplined approach to growth. If you know someone who might benefit from this perspective, feel free to forward this note. If you have questions or would like to schedule a conversation, please be in touch.
Thank you for your continued trust.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book time with Ben W. Kizemchuk: Portfolio and Plan Review
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
Recent Posts
December 2025 Update
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November 2025 Update
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October 2025 Update
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September 2025 Update
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August 2025 Update
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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.