During the first quarter of 2026 global markets experienced heightened volatility driven by escalating geopolitical conflict in the Middle East and the associated disruption to global energy supply. The closure of key shipping routes led oil prices to spike above $100 per barrel, reigniting inflation concerns and weighing on both equity and fixed income markets worldwide.

Against this backdrop, diversified portfolios and benchmarks yielded modest losses for the quarter, outperforming the deeper losses of the major indexes for the quarter, and remained well positioned to address a myriad of uncertainty over longer-term horizons. Equity markets broadly declined in Q1, with the S&P 500 down 4.3% and the Nasdaq declining 7.1%. Growth stocks materially underperformed value stocks across both large- and small-cap segments. International equities lagged U.S. markets, particularly in Europe and parts of Asia, due to their greater reliance on energy imports passing through the Middle East. In fixed income markets rising yields and inflation uncertainty resulted in modest losses across most bond sectors and durations, although high-quality and shorter-duration strategies continue to provide relative stability.

Looking ahead

The collective outlook of most managers is cautious but measured. Elevated energy prices pose ongoing inflation risk, recession probabilities remain low to moderate, and historical data suggest that markets stabilize in the months following geopolitical shocks. Hopes for additional rate cuts, which generally provide favorable conditions for both equity and fixed income markets, are fading as we head into summer. The current prevailing sentiment is the Fed will leave rates flat for the rest of 2026 but leave the door open for a rate cut during the ongoing conflict with Iran, the continued tug of war between rising inflation, and the uncertainty of corporate earnings that are highly dependent upon consumer and AI infrastructure spending.

Performance of NCCF investment managers in the first quarter of 2026

NCCF managers experienced modest losses for the quarter in the range of 1% to 3.5%. For the first time in a while, diversified portfolios outperformed growth-oriented strategies which is expected during bouts of volatility. Returns remain positive on a rolling longer term basis with most managers averaging double-digit positive returns at the one- and three-year intervals. Returns at the 5-,10- and 15-year intervals are lower, and in line with the broader goal of supporting endowment spending.

Additional market commentary is available from NCCF’s investment advisor, Graystone Morgan Stanley. For investment information specific to your fund, please contact your Donor Engagement Officer or email support@nccommunityfoundation.org. 

	1-Year	3-Years	5-Years	10-Years	15-Years
Long Term Diversified Pool	12.0%	10.4%	5.1%	7.3%	6.5%
Benchmark – Diversified	15.5%	11.6%	6.6%	8.3%	7.2%
Long Term Growth Pool	14.9%	13.5%	7.5%	9.3%	8.5%
Benchmark – Blended	13.4%	11.7%	6.5%	8.7%	8.3%
All Managers (Net Weighted)	13.0%	11.4%	5.8%	8.0%	7.3%
Benchmark – Broad	15.2%	12.6%	6.8%	8.6%	7.4%
Benchmark – Broad: This benchmark represents a general approach to investment. 70% MSCI All Country World Equity Index , 30% Bloomberg Barclays Aggregate Bond Ind
Benchmark – Diversified: This benchmark represents a diversified approach to investment with material allocations to a combination of private equity, private debt, and alternative investments. 24% MSCI ACWI ex US, 20% S&P 500, 10% Russell 2500, 18% Bloomberg Barclays Aggregate Bond Index, 10% HFRI FOF index, 6% MSCI Infrastructure, 6% Cambridge Private Equity, 4% Barclay CTA, 2% Cambridge Private Debt
Benchmark – Blended: This benchmark represents a diversified approach to investment in public markets. 35% R1000, 15% Russell Midcap, 5% R2000, 10% MSCI EAFE Net, 30% Barclays Govt/Credit Bond, 5% FTSE Treasury Bill 3 Month.