Q1 2026 Market Review: Insights on Domestic & International Markets

Global markets had a volatile and negative start to 2026 as geopolitical shocks, elevated energy prices, and sharp declines in mega‑cap growth stocks weighed on returns. The S&P 500 fell 4.3% for the quarter, marking its weakest first quarter since 2022, despite a late‑month rally. Developed and emerging markets also declined but outperformed U.S. equities.

Performance diverged significantly across sectors. Energy stocks surged more than 30% on supply disruptions and rising oil prices tied to Middle East conflict, while technology, consumer discretionary, and financials lagged. Mega‑cap technology stocks—including Microsoft, Nvidia, Apple, and Tesla—were the largest detractors.

Persistent inflation kept the Federal Reserve on hold, tempering expectations for rate cuts. Regional equity performance was mixed, with gains in Japan, Canada, and the UK, while Korea and Taiwan stood out among emerging markets.

Fixed income returns were modestly negative. Bond yields remained under pressure amid inflation and geopolitical risks, credit spreads widened slightly, and municipal bonds posted small losses.

(We highly suggest you watch Mark Hebner's breakdown of the quarter one market review as he discusses some of the new indexes featuring new factor tilts toward high profitability and core as well as new stock and bond fund allocations. As always if you have any questions related to some of the new allocations please reach out to your wealth advisor.)

Domestic Equities

As we mentioned in the video above we have added to our domestic equity indexes the new factor tilts for our high profitability and core indexes. Five out of nine of IFA's domestic equity indexes posted positive returns for the quarter. Large Value (LV) and Small Value (SV) had the best performance in the first quarter with a 4.80%(LV) and a 6.91%(SV) return. Coming in with the third highest return for the quarter was U.S. Small Company(SC) with a 2.27% return followed by U.S. Mid Cap Index(MD) with a return of 2.49%. The U.S. Small Growth(SG) came in with a return of 0.27%. Rounding out the bottom four were U.S. Large Growth(LG) which finished the quarter down -10.39% and U.S. Large Company(LC) which finished with a -4.10% return. The US Core Equity 2(UCE) finished down -1.55% and U.S. Large Company High Profitability(LCH) finished down -2.98%.

International Equities

All International Indexes finished the quarter in positive territory. The IFA International Value Index posted a positive return of 4.35% while the IFA International Small Cap Value Index returned 1.88% for the quarter followed by the IFA International Small Company Index returning 0.34%. We have added two new indexes that of the IFA International Large Company High Profitability(IHP) Index which returned 0.54% and the IFA International Core Equity(ICE) Index which returned 1.54% for the quarter.

Emerging Markets Equities

Stocks issued by companies based in developing countries had positive results for the quarter with all of IFA's Emerging Market Indexes posting positive returns. The IFA Emerging Markets Value Index led the way coming in with a 2.58% return followed by the IFA Emerging Markets Index returning 0.49%. The IFA Emerging Markets Small Cap Index came in third with a 0.44% return for the quarter. The newly added IFA Emerging Market High Profitability Index returned 1.28% and the IFA Emerging Markets Core 2 Index returned 0.96% for the quarter.

Real Estate Equities

IFA's Global REIT Index ended the quarter up posting a positive return of 0.63%.

Fixed-Income

All four of IFA's fixed-income benchmarks produced positive returns for the first quarter. The IFA Short Term Government Index finished the quarter with a postive 0.87% return. The IFA One-Year Fixed Income Index and the IFA Two-Year Global Fixed Income Index finished up 0.91% and 0.77% respectively. The IFA Five-Year Global Fixed Income Index came in with a return of 0.25%. We have added four new bond indexes to our fixed-income indexes. They are the IFA Short Duration Fixed Income Index(SFI) which returned 0.09% followed by the IFA Global Core Ex-US Fixed Income Index(GXF) which returned -0.61%. The IFA Global Credit Index(GC) returned -0.41% and the IFA Core Fixed Income Index(CFI) returned -0.09%.

IFA Index Portfolios

The first quarter of 2026 was full of ups and downs but overall finished flat for all IFA portfolios. For the quarter, our all equity Portfolio 100 returned -0.10% while our portfolio 10 made up of 90% bonds and 10% equity posted a -0.44% return. Below is an overview of how several IFA Index Portfolios performed in Q1 as well as during the previous quarter. All of these returns are shown net of IFA's maximum annual 0.90% advisory fee through March 31, 2026.

Each quarter, we monitor our recommended funds for clients. As part of that process, we've developed a rating system. For a summary of those results, please feel free to check IFA's latest Performance Monitoring Report (PMR).

IFA encourages both novice and experienced investors to discuss their financial situation and investment goals with an IFA wealth advisor, tailoring strategies to their personal risk capacity and long-term objectives. Besides offering an online Risk Capacity Survey, we provide to each client a complimentary and holistic financial plan.

The wealth of IFA's educational materials are available for Apple iOS and Android devices via the IFA App. This free App is available to download from both the Apple App Store and the Google Play Store for Android.

Prior performance is not indicative of future results. Investors should review complete performance data over time before making investment decisions.

Footnotes

Dimensional, Market in Review Q1 2026: Markets Navigate Volatile Start to 2026 Amid Energy Shock and Divergent Sector Performance, April, 2026

Disclosure:

Performance results for actual clients investing in accordance with the IFA Index Portfolio Models may differ from backtested data due to factors such as fund implementation, market conditions, cash flows, mutual fund allocations, index changes, rebalancing, deviation from advice, retained securities, tax strategies, fees, and timing of fee deductions.

Diversification is a prudent investment approach, but it does not assure a profit or protect against loss in declining markets, nor does it eliminate all investment risks. Performance data presented is for illustrative purposes, and readers are encouraged to consider longer-term performance horizons, such as one-year, five-year, and ten-year periods, when making investment decisions. Comprehensive performance data, including net-of-fee results for these periods and additional disclosures, is available upon request.

This information is not an offer, solicitation, or recommendation for any security, product, or service. No investment strategy guarantees success, and all investing carries risks, including the potential loss of principal. Performance results may include both live and hypothetical data, which do not represent actual client portfolios and should not be interpreted as indicative of future results.

Hypothetical performance relies on assumptions, including fixed market conditions, periodic rebalancing, and historical data, and does not account for real-world factors such as transaction costs, tax implications, behavioral tendencies, or cash flows, which can affect results. References to diversification, portfolio construction, or market trends are intended for educational purposes and should not be considered prescriptive or guaranteed strategies for success.

The data provided is based on information believed to be accurate as of the date of publication but may change as market conditions evolve. Investors are encouraged to consult with a qualified advisor to assess personal financial goals and risk capacity. Additional information is available by reviewing IFA's ADV Brochure at https://www.adviserinfo.sec.gov/ or visiting www.ifa.com."