Positioning Client Portfolios for 2026
Lessons from 2025 and How Your Capital Is Positioned Today
As we enter 2026, many investors are reflecting on a year that reinforced an important reality. Market outcomes are increasingly shaped by volatility, correlation, and uncertainty. At Fortis Arbor, our role is not to anticipate every market movement, but to ensure client portfolios are constructed with resilience, flexibility, and long-term purpose.
The experience of 2025 strengthened several core principles that continue to guide how we steward client capital. Below, we outline what the past year reinforced and how those lessons are actively reflected in portfolio positioning today.
What 2025 Reinforced for Client Portfolios
Volatility Is Normal and Portfolios Must Be Built to Withstand It
Markets throughout 2025 experienced sharp rotations, drawdowns, and recoveries across asset classes. These movements were not isolated events, but the result of higher interest rate sensitivity, geopolitical uncertainty, and rapid shifts in market sentiment.
For clients, this means portfolios are designed with the expectation that volatility will occur. Position sizing, diversification, and risk controls are intended to reduce the impact of sudden market moves while preserving the ability to participate in long-term growth.
Liquidity Is a Strategic Asset
Periods of market stress in 2025 created opportunities for investors who retained flexibility. Portfolios that were overly concentrated or fully deployed often had limited ability to respond.
In practice, this is reflected through a deliberate balance between invested capital and accessible liquidity. Portfolios are positioned to allow rebalancing during periods of dislocation rather than forcing sales at unfavorable prices. Liquidity is also maintained to create optionality when valuations become more attractive. It is not held passively, but with clear intent.
Increased Demand for Fixed, Non-Correlated Returns
During 2025, we observed a sharp increase in client appetite for fixed return strategies that are non correlated to traditional public markets. This shift was driven by elevated equity volatility, changing correlations, and a desire for more predictable return streams within portfolios.
Clients increasingly favored investments that are structured or contractual rather than market dependent, provide defined return expectations, and reduce reliance on equity market direction.
This is reflected in portfolios through selective allocation to fixed return opportunities with clearly defined risk parameters. Greater emphasis is placed on return drivers linked to structure, cash flow, or counterparties rather than market sentiment. Non correlated income sources are integrated to help smooth overall portfolio volatility and reduce dependence on broad market movements.
Strong Fundamentals Outperformed Market Narratives
While 2025 was dominated by powerful investment themes, performance dispersion was significant. Assets and businesses with strong cash flows, pricing power, and prudent balance sheets consistently proved more resilient than those driven primarily by narrative momentum.
Our approach for clients emphasizes investments supported by sustainable cash flow generation, balance sheet strength, sensible leverage, conservative assumptions, and clear alignment between investors and operators. This focus reduces reliance on sentiment and supports long-term compounding.
Diversification Must Be Intentional
Shifting correlations throughout 2025 challenged traditional diversification assumptions. Assets that historically moved independently sometimes declined simultaneously during periods of stress.
For client portfolios, diversification is constructed across asset types and strategies, multiple sources of cash flow, geographic exposure, and different time horizons. This approach helps mitigate concentration risk and improves overall portfolio resilience.
How Client Portfolios Are Positioned for 2026
Rather than making large directional bets, Fortis Arbor enters 2026 with portfolios designed to perform across a range of outcomes. The priority remains capital preservation alongside participation in long-term opportunity.
Emphasis on Capital Quality
Even if interest rates decline modestly, capital is likely to remain structurally more expensive than in the prior decade.
Client portfolios emphasize capital efficient investments, predictable income streams, and conservative underwriting with disciplined use of leverage. This positioning helps reduce sensitivity to refinancing risk and interest rate volatility.
Selective Exposure to Growth
Growth remains an important component of wealth creation, but selectivity is critical.
Portfolios maintain measured exposure to innovation and structural growth trends while favoring businesses that generate returns today rather than relying solely on future projections. Concentration risk is actively managed to avoid overexposure to any single theme.
Continued Role of Private Markets and Real Assets
Private investments and real assets remain central to many client portfolios, particularly for income generation, inflation resilience, and diversification away from public markets.
The focus remains on manager alignment and transparency, downside protection and cash flow visibility, and avoiding unnecessary complexity. Selectivity is essential as dispersion within private markets continues to increase.
Risk Management as an Ongoing Process
Risk management is embedded in every investment decision and continuously monitored. In 2026, avoiding permanent capital loss remains just as important as capturing upside.
For clients, this means ongoing portfolio monitoring, scenario analysis across economic and market environments, and disciplined rebalancing rather than reactive decision making.
What This Means for You as an Investor
The defining lesson of 2025 was not about market timing or short-term performance. It was about building portfolios that can endure uncertainty while continuing to grow over time.
Your portfolio is designed to protect capital during periods of market stress, provide more predictable return streams where appropriate, remain flexible as conditions evolve, and compound wealth steadily over the long term.
Closing Perspective
Markets will continue to change, often unpredictably. Our responsibility is to steward your capital with discipline, clarity, and care.
As we move into 2026, Fortis Arbor remains focused on delivering resilient portfolio outcomes and acting as a long-term partner through all market environments.
