Holding Steady into Year-End Volatility

9 January 2026

As the year drew to a close, December proved to be a month of consolidation rather than conviction across global markets. After a strong recovery through most of 2025, investors turned more cautious amid thinner year-end liquidity, profit-taking, and lingering macro uncertainty. In this environment, SqSave portfolios stayed disciplined, focusing on preserving gains rather than chasing short-term moves.

While broad markets moved sideways with pockets of volatility, SqSave’s AI-driven portfolios continued to demonstrate resilience. Our approach remained unchanged: measured risk-taking, data-led allocation, and dynamic adjustments as conditions evolved.

SqSave Investment Performance

December saw modest pullbacks across many asset classes. Despite this, SqSave once again compared favourably against most competitors across the various risk levels with only the balanced reference portfolio showing minor underperformance vs. its peers. This underscored the strength of our defensive positioning and disciplined portfolio construction.

Latest 1 Month Returns to 31 December 2025

Even in a quieter, more defensive month, SqSave portfolios largely limited downside and, in some risk categories (i.e. Growth and Aggressive), remained positive. This reflects our AI’s focus on controlling volatility and avoiding overexposure when market signals weaken.

Year-End Recovery at a Glance

December marked the 2nd straight month of hesitant conditions for markets following a strong six-month recovery phase that began after April’s market lows. While YTD gains moderated slightly due to year-end consolidation, all SqSave reference portfolios closed the year firmly in positive territory.

2025 Full Year vs. Apr 2025 Market Lows & Prior Years Returns

Key takeaways:

• All portfolios ended 2025 solidly in the black on a full year basis, despite increased volatility in Q4.

• The Aggressive reference portfolio lead overall returns, reflecting effective participation in equity upside earlier in the year.

• Balanced and Growth portfolios also delivered strong full-year recoveries, helped by the benefits of diversified exposures across equities and lessor correlated asset classes like fixed income and alternative assets like gold (via GLD ETF), which our AI has maintained a strong overweight allocation to in all reference portfolios.

• The Conservative reference portfolio preserved capital effectively by closing the year with double-digit gains for the 3rd year running, reinforcing SqSave’s commitment to downside protection while maximising returns on a risk adjusted basis.

This full-year performance arc once again demonstrates that SqSave’s AI adapts systematically, reducing risk when conditions soften and reallocating when opportunities improve.

Investment Environment

• Global Growth: Momentum continues to slow heading into 2026, with advanced economies showing softer consumption and investment trends.

• Inflation: Inflation has continued to ease gradually, though core inflation remains above central bank comfort levels, keeping policy expectations cautious.

• US Federal Reserve: US Policy Interest Rate was cut by another 0.25% in December (its 3rd in 2025) to the 3.5%-3.75% level. However, some dissention appeared among some hawkish policymakers, leaving an air of uncertainty hanging over where policy is headed in early months of 2026. In addition to the rate decision, the Fed also said it will resume monthly buying of USD40 billion of Treasury securities for a few months (with some experts calling it a form of stealth added easing, as a just in case measure) to shore up pressures in overnight funding markets.

• Equities: Equity markets paused for a second straight month after a strong multi-month rally, with year-end profit-taking and valuation concerns weighing on sentiment.

• Geopolitics & Energy: Ongoing geopolitical tensions and energy supply risks continued to inject volatility, reinforcing the need for diversification and risk management.

Outlook

As we enter the new year, markets remain finely balanced:

• Inflation is trending lower, but not yet fully contained. This is also reflected by gold’s relentless 63% price runup in 2025, ending the year with still strong investor optimism over the year ahead.

• Monetary policy is mildly restrictive, though increasingly stable, with the latest “stealth” easing by US Fed signalling its intent to shore up lending market liquidity pressures.

• Growth is slowing with US jobs growth remaining tepid albeit still positive, but recession risks remain contained.

In this environment, SqSave’s advantage remains clear. Our AI-driven portfolios do not rely on forecasts or emotions, they respond to data. As conditions evolve, our system continuously recalibrates allocations to manage risk and capture opportunity.

Whatever 2026 brings, SqSave portfolios are positioned with discipline, agility, and resilience.

Sincerely,
SqSave Investment Team

Disclaimer

The contents herein are intended for informational purposes only and do not constitute an offer to sell or the solicitation of any offer to buy or sell any securities to any person in any jurisdiction. No reliance should be placed on the information or opinions herein or accuracy or completeness, for any purpose whatsoever. No representation, warranty or undertaking, express or implied, is given as to the information or opinions herein or accuracy or completeness, and no liability is accepted as to the foregoing. Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an individual remain the responsibility of that individual. All investors are advised to fully understand all risks associated with any kind of investing they choose to do. Hypothetical or simulated performance is not indicative of future results. Unless specifically noted otherwise, all return examples provided in our websites and publications are based on hypothetical or simulated investing. We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because hypothetical or simulated performance is not necessarily indicative of future results.

Footnotes:
^1. Portfolio returns are inclusive of ETF expense ratios and net of SqSave management fees. SqSave uses AI to design and manage diversified investment portfolios for each investor. Because SqSave is not an investment fund, there is no single return measure. Instead, every SqSave investor has his/her own investment performance as each investor is managed separately by our SqSave AI. As investors can withdraw and top-up any time, investment returns will be affected by individual investor decisions. Hence, SqSave uses reference portfolios which are actual portfolios managed on an ongoing basis, without any interference with withdrawals or top-ups, to measure investment performance.
^2. Performance numbers for peers are estimates.

More Articles more