January marked a strong start to the year for Umbra’s MPS range, with positive returns across most risk profiles supported by broad-based gains in global equity markets. Performance was underpinned by improving market breadth, strength across emerging markets and Japan, and continued resilience in corporate earnings. Diversified positioning and disciplined rebalancing allowed portfolios to participate in the rally while managing pockets of volatility driven by geopolitical developments and shifting policy expectations.
Global markets advanced against a backdrop of resilient economic data and broadly benign inflation, reinforcing confidence that the global tightening cycle is nearing its end. While geopolitical tensions increased during the month, including developments in Venezuela and renewed trade rhetoric from the US, markets largely looked through these risks. Commodity markets reacted more sharply, with energy prices rising significantly and supporting inflation-sensitive assets, while expectations around central bank policy evolved following the nomination of a new Federal Reserve Chair and growing debate around balance sheet reduction.
Equity markets delivered strong, broad-based returns, with leadership continuing to rotate away from the US. Emerging markets were a standout, materially outperforming developed markets, supported by strength in China and Latin America. Japan also performed strongly, benefiting from currency weakness and improving earnings expectations, while UK and European equities posted solid gains supported by cyclical exposure. In contrast, US large caps lagged, although small caps outperformed, highlighting a continued broadening in market participation. Style dynamics also shifted, with value outperforming growth at a global level, driven by cyclical sectors and improving earnings revisions.
Fixed income markets delivered positive but more modest returns. Government bonds were supported by expectations for policy easing, although performance was tempered by stronger economic data and renewed concerns around fiscal sustainability, particularly in the US. Credit markets continued to generate incremental returns through spread compression, while emerging market debt benefited from favourable currency moves and stronger risk sentiment.
Alternative assets contributed positively, with gold delivering strong gains amid elevated geopolitical risk, continued central bank demand and concerns around fiscal imbalances. Within portfolios, rebalancing activity allowed us to crystallise some of these gains while maintaining a strategic allocation given the ongoing strength of the underlying investment case. Listed real assets also posted modest gains, supported by improving sentiment and stabilising rate expectations.
Overall, Umbra’s MPS portfolios navigated January’s environment effectively. Broad diversification, active positioning and a disciplined approach to risk enabled participation in a strong start to the year, while maintaining resilience against geopolitical uncertainty, evolving monetary policy expectations and increasingly differentiated regional and sector performance.
