July 9, 2026
By Matthew Vegari, Head of Research
At the start of the year, the macro outlook for 2026 looked stable: the Fed had cut several times and landed at or near neutral policy territory; tariff-induced inflation was rolling over; the consumer remained disgruntled yet poised to keep spending; the labor market had cooled but not gone cold.
At the end of February, turmoil in the Middle East threatened to upend that equilibrium. The US and Israel launched a military campaign against Iran, and the calculus for investors changed overnight. Brent crude surged more than 55%. Yields spiked and equities plummeted as markets braced for a full-blown energy shock and another bout of inflation following Iran’s closure of the Strait of Hormuz.
By the end of Q2, however, such anxieties were a distant memory: oil prices had come back into check, equities had notched one of the fastest recoveries in decades, and long rates had retreated from their highs, if not having quite returned to pre-conflict lows.
Now in Q3, the fundamentals of the economy look much as they did at the start of the year, barring marginally higher energy prices (and perhaps a more exasperated consumer): the AI boom marches ahead, credit markets remain healthy, and the Fed, under new leadership, has held rates steady (for now).
This market brief looks back at how insurers and private wealth investors weathered H1 turbulence and assesses portfolio positioning for the quarters ahead.
Insurers are ending H1 in the black, up 2.2% year to date on average, though the path was anything but smooth. The shape of returns should look familiar: a rally through February, a sharp dip as the Iran conflict broke out, and a steady climb back through Q2. It’s the same dip-and-recovery pattern that defined 2025’s Liberation Day selloff. The difference is pace: last year’s YTD returns through June sat closer to 4%. In fact, this year’s trajectory looks less like 2025’s banner year for portfolios and more like 2024—a year that also saw its share of rate-hike scares, growth wobbles, and inflation surprises.
The trough came in late March, when YTD performance dipped to -0.4%, down from a pre-war peak of nearly 1.8% in late February. From there, the recovery has been broad-based. Equities have led the bounce-back, but fixed income deserves equal billing. Price returns have been modest but today’s high-rate environment continues to confer income gains to investors.
Alternatives, led by private credit offered steady returns throughout. (Check out our recent private credit report to learn more.) On average, insurer portfolios currently allocate 67% to fixed income, 16% to alts, 11% to equities, and 7% to cash.
(For a detailed breakdown of performance and strategy by industry segment, please contact the Research Desk.)
Private wealth portfolios are up an average 6.1% year to date through July 3, well ahead of insurers. Single-name stocks did the heavy lifting, contributing 4 percentage points of that gain, a reminder that family offices and ultra-high net worth investors are, at heart, stock pickers. Single-name bets have done more work for returns than passive fund exposure.
The ride to 6.1% was the roughest of any segment we cover at Clearwater: private wealth portfolios swung from -2.4% YTD in late March to +4.1% just three weeks later, as initial energy shock jitters gave way to a forceful rebound.
Such volatility is, of course, a function of positioning. Equity exposure remains higher today than it was a few years ago, with fixed income allocations falling in kind—a continuation of the rotation we flagged in our February 10 brief. On average, PW portfolios currently allocate 47% to equities, 30% to fixed income, 12% to alts, and 7% to cash (a final 3% are generically labeled or unclassified on Clearwater). More equities, and more single-name equities specifically, means more torque in both directions when markets move.
Additional research by Tyler Busby, Data Scientist
This research was featured in The Wall Street Journal and Bloomberg Law on July 9th, 2026.
Timely analysis of movements observed in Clearwater’s proprietary database and indices, exploring monetary policy, credit conditions, foreign exchange, equities, alternative assets, and more.
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