| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 2.1% | 18.6% |
| 2025 |
|---|
| 18.6% |
Opal Capital delivered solid Q4 2025 performance driven by international equity exposure, particularly in Europe and Japan, as investors rotated toward better valuations. The manager emphasizes that while markets delivered strong absolute returns in 2025, structural risks are building beneath the surface. Four key themes define their 2026 outlook: de-globalization and geopolitical risk creating structural volatility, concentration risk in passive benchmarks with over 40% of the S&P 500 held by eight companies, U.S. dollar weakness benefiting international exposure, and elevated valuations with suppressed volatility historically preceding sharp sell-offs. Portfolio positioning emphasizes global diversification particularly outside the U.S., active risk management to address concentration and volatility, multiple return sources rather than narrow market leadership, and preparedness for drawdowns. The manager expects 2026 to feature higher volatility, greater dispersion across asset classes and regions, and lower tolerance for elevated valuations. While remaining constructive on long-term opportunities, they prioritize resilience alongside return potential for disciplined long-term investors.
Focus on protecting and compounding capital across full market cycles through global diversification, active risk management, and positioning for higher volatility and dispersion while structural risks build beneath strong market performance.
Manager believes 2026 will be defined by higher volatility relative to the past decade, greater dispersion across asset classes and regions, and lower tolerance for elevated valuations and concentration. While remaining constructive on long-term opportunities, they are increasingly focused on resilience alongside return potential.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 23 2026 | 2025 Q4 | BIV, DIVZ, IDVZ, IEFA, JEPI, PCHI, UVXY, VEA, VGLT, VGSH, VTV, VXX | diversification, Dollar, ETFs, Europe, international, risk management, Valuations, volatility | - | Manager emphasizes global diversification as a key positioning strategy, particularly outside the U.S., to address concentration risks and benefit from more attractive valuations in international markets. This is driven by structural shifts including de-globalization and geopolitical tensions. Manager expects higher volatility in 2026 relative to the past decade, with suppressed volatility historically preceding sharp sell-offs. They view volatility as creating opportunities for disciplined long-term investors and maintain hedging positions to protect against drawdowns. Structural dollar weakness driven by fiscal deficits and shifting capital flows is viewed as a tailwind for international exposure. This currency trend supports the manager's positioning toward non-U.S. assets. Manager highlights elevated valuations as a structural risk, particularly in U.S. markets, while finding more attractive opportunities in international regions. They emphasize the historical pattern of elevated valuations plus suppressed volatility preceding sharp sell-offs. |
| Oct 8 2025 | 2025 Q3 | - | earnings, Fed, inflation, productivity, risk-on | - | Markets reflect optimism around cooling inflation, a dovish Federal Reserve, and resilient labor markets, supporting a risk-on backdrop. Diversified portfolios benefit from equity strength, while defensive assets lag during the rally. Looking ahead, earnings durability, inflation trends, and AI-driven productivity remain central macro drivers. |
| Jul 22 2025 | 2025 Q2 | - | asset allocation, diversification, free cash flow, Geopolitical Risk, Volatility Management | - | The letter emphasizes disciplined, diversified portfolio construction as the primary response to heightened geopolitical risk, tariff-driven volatility, and shifting policy environments. Management argues that short-term market reactions to headlines are often temporary, while long-term returns are driven by earnings, free cash flow, and asset allocation discipline. Positioning across international equities, low-duration fixed income, and volatility hedges is intended to reduce drawdowns while allowing portfolios to participate in equity upside as fundamentals remain resilient. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
DiversificationThe Fund remains purposefully diversified despite market leadership being narrow and focused on AI. This discipline reflects commitment to effective risk management and appropriate diversification, which weighed on relative performance but positions the Fund well for various market scenarios. |
Risk Management Portfolio Construction Concentration |
DollarDollar depreciated -9% against trading partners in 2025, worst year since 2017. De-dollarization trend accelerating as world shifts away from US. Reduced net dollar exposure from 25% to 8% following geopolitical tensions and superpower positioning concerns. |
Depreciation De-dollarization Reserves Geopolitical | |
ValuationsEquity valuations remain elevated with the S&P 500 trading near 23x forward earnings, well above its long-term average of 15.6x. High valuations may increase market sensitivity to earnings disappointments and tend to constrain longer-term returns, reinforcing the importance of selectivity. |
Multiples Premium Earnings Risk Selectivity | |
VolatilityMarket volatility in spring 2025 triggered by trade tariff uncertainty led to a broad sell-off, with strategies down over 23% year-to-date at the trough. The manager used this volatility to add exposure at attractive prices during the decline. |
Market volatility Sell-off Opportunity Exposure Timing | |
| 2025 Q3 |
Macro |
|
| 2025 Q2 |
DiversificationThe Fund remains purposefully diversified despite market leadership being narrow and focused on AI. This discipline reflects commitment to effective risk management and appropriate diversification, which weighed on relative performance but positions the Fund well for various market scenarios. |
Risk Management Portfolio Construction Concentration |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| DIVZ | Opal Dividend Income ETF was a detractor with only 0.68% return, as U.S. dividend stocks lagged while international and speculative areas of the market ran harder. |
| IDVZ | Opal International Dividend Income ETF contributed positively with a 3.86% return, benefiting from the international equity rotation. |
| IEFA | iShares Core MSCI EAFE ETF drove performance this quarter with a 4.45% return, benefiting from investor rotation toward better valuations in international markets. |
| JEPI | JPMorgan Equity Premium Income ETF posted a 2.92% return and was a contributor to the short-term strategy. |
| UVXY | ProShares Ultra VIX Short-Term Futures ETF declined 21.76% as a short-term hedge designed to protect against drawdowns, declining as markets continued higher. |
| VEA | Vanguard FTSE Developed Markets ETF posted a 6.01% return as Europe and Japan led the way with investors rotating toward better valuations. |
| VGLT | Vanguard Long-Term Treasury ETF declined 0.41% as long-duration Treasuries were detractors during the quarter. |
| VXX | iPath Series B S&P 500 VIX Short-Term Futures ETN declined 9.47% as a short-term hedge designed to protect during drawdowns. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
