Model Portfolio Pulse: 3 reasons for balance amid volatility
April 28, 2026
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3 min
Markets entered March amid a sharp rise in uncertainty following U.S. military action involving Iran. The resulting spike in energy prices, shifting central bank expectations, and an already slowing U.S. economy created a challenging backdrop for investors. While conditions showed signs of stabilizing later in the month, risks remain elevated. In this environment, our focus has been on maintaining balance while preserving flexibility within our model portfolios.
Key takeaways
- Geopolitical tensions triggered an oil price shock and renewed inflation concerns.
- Markets found some stability as energy prices and yields pulled back.
- Surveys, sentiment, and positioning offered reasons to remain calm.
- Model portfolios moved closer to benchmarks while retaining flexibility.
Why we stopped short of a bearish stance
Despite the increase in volatility, there were three key reasons we avoided turning outright negative.
First, signs of stabilization emerged late in the month. A two week ceasefire announcement led to a sharp decline in energy prices, easing some immediate inflation pressure. Bond yields also moved lower alongside oil prices, particularly outside the U.S., where short term yields had previously spiked in response to higher commodity prices. While uncertainty remains, these moves suggested the oil shock could be moderating.
Second, cyclical data in the U.S. continued to point to pockets of strength. Manufacturing and services surveys remained firm, supporting the view that economic momentum had not collapsed despite mixed macro signals. In addition, ongoing global investment tied to the artificial intelligence buildout continues to provide support for global growth.
Third, market prices had already corrected meaningfully since February. That correction helped temper extended positioning and extreme bullish sentiment seen earlier in the year. With a degree of risk premium priced back into markets, the likelihood of a sentiment driven overshoot to the downside appeared reduced.
Taken together, these factors supported a more balanced stance rather than a decisive shift toward risk aversion.
Natixis model portfolio positioning
March marked our annual model rebalance, an opportunity to reassess long term views, review active managers, and adjust portfolio structure. Strategic changes were limited this year, with one active high yield mutual fund removed from select tax aware models. The rebalance itself resulted in an elevated number of trades as allocations across mutual funds were refreshed.
The process also included several tactical adjustments. Within U.S. equities, we increased exposure to the Invesco S&P 500® Equal Weight Technology ETF (RSPT). We also initiated a new position in Japanese equities through the JPMorgan BetaBuilders Japan ETF (BBJP). Within emerging markets, we took profits in the iShares MSCI Emerging Markets ex China ETF (EMXC) and reentered Latin American equities via the iShares Latin America 40 ETF (ILF).
Later in the month, we implemented a modest risk reduction trade that was executed very early in April. This adjustment reduced equity exposure by 2% in most models. The trade was funded by closing the RSPT position and reallocating toward bonds, moving portfolio positioning closer to benchmark levels amid heightened uncertainty.
At month end, model positioning was characterized by:
- Slightly overweight stocks versus bonds
- A tilt toward growth over value
- Overweight U.S. stocks
- Overweight emerging market stocks
- Underweight international developed market stocks
- Neutral to slightly underweight duration
Overall, portfolios are not positioned aggressively relative to benchmarks and retain dry powder to deploy should volatility persist or market prices correct further.
