Strategy Review – January 2026
(Market Data as of 01/31/2026)
Monthly Strategy Commentary
By Kensington Asset Management Team
RISK ASSETS ADVANCED IN JANUARY AS COMMODITIES LED AND THE DOLLAR WEAKENED
January opened with elevated headline risk and uneven leadership, but broad risk assets finished higher. The S&P 500 gained 1.37% and the NASDAQ 100 rose 1.20%, while market breadth improved as the Russell 2000 advanced 5.31% and the S&P 500 Equal Weight Index gained 3.28%.
Outside the US, developed international equities rose 3.22% (MSCI EAFE) and emerging markets advanced 8.78%. Real assets were a standout. S&P GSCI Index Spot commodities rose 9.06% and S&P GSCI Gold Total Return Index advanced 8.82%. The US dollar weakened, with Bloomberg Dollar Spot down -1.27%.
In fixed income, higher carry continued to support returns even as rate volatility persisted. US Corporate High Yield returned 0.51% and investment grade corporates returned 0.18%. Treasury returns were mixed, with the 10-year segment down -0.41% for the month.
MANAGED INCOME STRATEGY
Author: Kensington Asset Management PM Team
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | 3 Yr | 5 Yr | 10 Yr | 15 Yr | Since Incep. |
| Managed Income Strategy (Gross) | 0.63% | 0.63% | 6.14% | 5.92% | 3.02% | 5.25% | 5.60% | 8.29% |
| Managed Income Strategy (Net 3%) | 0.37% | 0.37% | 3.00% | 2.79% | -0.03% | 2.14% | 2.48% | 5.09% |
| Bloomberg US Agg Bond TR USD | 0.11% | 0.11% | 6.85% | 3.65% | -0.20% | 1.88% | 2.42% | 2.98% |
Inception Date: 12/31/2007
Managed Income Strategy returned 0.63% gross (0.37% net) for the month of January. Fixed income began the year with solid results across most major sectors. While the 10-year Treasury yield moved higher during the month, credit-sensitive sectors remained supported, and both high yield and investment grade posted positive returns.
The Managed Income Strategy remained fully Risk-On, continuing to emphasize US high yield as the core allocation. Multisector fixed income remained an important satellite holding and contributed to diversification across credit qualities and sectors.
We continue to view the near-term credit backdrop as constructive, but the Risk-On posture has now persisted for nine consecutive months. We remain attentive to any sustained increase in downside pressure that could warrant a more defensive shift within the Strategy.
CREDIT OPPORTUNITIES STRATEGY
Author: Kensington Asset Management PM Team
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | 3 Yr | Since Incep. |
| Credit Opportunities Strategy (Gross) | 0.58% | 0.58% | 3.01% | 5.52% | 6.10% |
| Credit Opportunities Strategy (Net 3%) | 0.32% | 0.32% | -0.03% | 2.41% | 2.96% |
| Bloomberg US Agg Bond TR USD | 0.11% | 0.11% | 6.85% | 3.65% | 4.80% |
Inception Date: 8/31/2022
Credit Opportunities Strategy returned 0.58% gross (0.32% net) for the month of January. The Credit Opportunities Strategy remained fully invested during the month. The portfolio continues to be high-yield-centric, complemented by satellite allocations to investment grade corporates, asset-backed securities, and Treasuries.
The Strategy remains focused on generating compelling yield while maintaining flexibility to adjust exposures as relative value changes. In the near term, we expect positioning to remain aligned with the current credit backdrop.
DYNAMIC ALLOCATION STRATEGY
Author: Kensington Asset Management PM Team
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | 3 Yr | 5 Yr | 10 Yr | Since Incep. |
| Dynamic Allocation Strategy (Gross) | -0.04% | -0.04% | 36.52% | 18.44% | 13.34% | 17.81% | 16.80% |
| Dynamic Allocation Strategy (Net 3%) | -0.29% | -0.29% | 32.49% | 14.94% | 9.99% | 14.33% | 13.35% |
| S&P 500 TR USD | 1.37% | 1.37% | 16.35% | 21.11% | 14.99% | 15.57% | 13.57% |
Inception Date: 12/31/2014
Dynamic Allocation Strategy returned -0.04% gross (-0.29% net) for the month of January. Equity markets recovered in January, with several major US indices reaching new highs and market breadth improving. The Nasdaq Composite lagged the broader market, reinforcing the ongoing theme of rotation away from the narrow leadership that dominated much of the prior two years.
In early January, Dynamic Allocation transitioned to a Risk-Off posture, marking the end of a long-lived 35-week Risk-On trade that began in late April. The shift was driven by consolidation and rangebound behavior in the Nasdaq Composite toward year end, which reduced the trend strength that had supported the prior positioning.
If this range persists, it is reasonable to expect more frequent shifts, given the Strategy’s process and its sensitivity to trend and price behavior. A decisive breakout to new highs or a breakdown through the lower end of the range would be more likely to produce a longer-lived signal.
ACTIVE ADVANTAGE STRATEGY
Author: Kensington Asset Management PM Team
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | 3 Yr | Since Incep. |
| Active Advantage Strategy (Gross) | 1.57% | 1.57% | 13.18% | 10.54% | 9.21% |
| Active Advantage Strategy (Net 3%) | 1.31% | 1.31% | 9.84% | 7.27% | 5.98% |
| S&P 500 / Bbg Agg 50-50 | 0.78% | 0.78% | 11.67% | 12.19% | 14.04% |
Inception Date: 12/31/2021
Active Advantage Strategy returned 1.57% gross (1.31% net) for the month of January. Active Advantage remained fully invested throughout January and continued to target an approximate 50% allocation to fixed income and 50% to equities. The fixed income sleeve remains high-yield-centric, complemented by satellite allocations to emerging-market bonds and multisector strategies. The equity sleeve remains diversified across core and growth large caps, along with high dividend and minimum volatility exposures intended to help stabilize returns during more volatile periods.
The Strategy reached another new all-time high as the fixed income sleeve delivered solid results and the more dividend and value-oriented equity exposures provided balance against areas of the market that lagged.
DEFENDER STRATEGY
Author: Elio Chiarelli, PhD, AIF – Lead Portfolio Manager, Liquid Strategies
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | Since Incep. |
| Defender Strategy (Gross) | 5.21% | 5.21% | 17.79% | 11.36% |
| Defender Strategy (Net 3%) | 4.94% | 4.94% | 14.31% | 8.06% |
| Morningstar Global 60/40 NR USD | 2.34% | 2.34% | 16.53% | 13.04% |
Inception Date: 12/31/2021
Defender Strategy returned 5.21% gross (4.94% net) for the month of January. The month began with heightened volatility as investors digested a shifting geopolitical and macro backdrop. Leadership rotated away from high-multiple growth stocks and toward more defensive and value-oriented segments, while real assets were notably strong. International equities also outperformed, supported by more attractive relative valuations and a weaker US dollar.
Against this backdrop, the Defender Strategy benefited from its diversified global opportunity set and its flexibility to allocate toward asset classes demonstrating sustained momentum. International exposures and hard assets were meaningful contributors during the month, while US large-cap growth faced intermittent pressure.
Looking ahead, the Strategy is implementing a measured adjustment consistent with the ongoing rotation toward international markets and real assets. The Strategy will reduce exposure to the Nasdaq 100 and increase allocation to broad commodities, reflecting strengthening momentum in real assets and the potential diversification benefits commodities can provide in an environment marked by elevated uncertainty and cross-asset volatility.
HEDGED PREMIUM INCOME STRATEGY
Author: Shawn Gibson – CIO, Lead Portfolio Manager, Liquid Strategies
| Performance (as of 1/31/2026) | Jan 2026 | YTD | 1 Yr | Since Incep. |
| Hedged Premium Income (Gross) | 0.84% | 0.84% | 11.17% | 12.89% |
| Hedged Premium Income (Net 3%) | 0.58% | 0.58% | 7.89% | 9.55% |
| S&P 500 TR USD | 1.37% | 1.37% | 16.35% | 16.42% |
Inception Date: 12/31/2021
Despite a relatively modest mid-month pullback, the S&P 500 Index rose 1.37% during January. The income-producing call spread expired and was reset on 1/16/2026, with the Index finishing 1.54% above the lower level of the spread. That finish resulted in a modest amount of lost appreciation for the December to January call spread cycle. For the month of January 2026 the Hedged Premium Income Strategy returned 0.84% gross (0.58% Net).
The new spread generated 1.37% of new income for the Hedged Premium Income Strategy and was implemented with the standard positioning (short call at 100% of the Index close and long call at 103% of the Index close). The downside buffer finished the month 6.43% below the Index close, offering protection from down 6.43% to down 21.43% in the Index through 3/20/2026.
With the income spread ending the month near the short strike, the Strategy enters February with a balanced profile that maintains equity exposure while seeking to generate option income and preserve defined downside protection.
Disclaimers:
Investing involves risk, including loss of principal. Past performance does not guarantee future results. There is no guarantee any investment strategy and/or diversification will generate a profit or prevent a loss. Targeted distributions are not guaranteed. For the most recent strategy performance, please visit our website: www.kensingtonassetmanagement.com.
Advisory services offered through Kensington Asset Management, LLC, Barton Oaks Plaza, Bldg II, 901 S Mopac Expy – Ste 225, Austin, TX 78746. Liquid Strategies, LLC, serves as a Sub Advisor for the Kensington Defender Strategy and investment adviser to Hedged Premium Income Strategy. Liquid Strategies, LLC is not affiliated with KAM.
Important Disclosures | Glossary
For performance and important risks about the investment strategies, visit:
Managed Income Strategy | Dynamic Allocation Strategy | Active Advantage Strategy | Defender Strategy
Hedged Premium Income Strategy
The Strategy invests in options that derive their performance from the performance of the S&P 500 Index. Selling (writing) and buying options are speculative activities and entail greater than ordinary investment risks. The Strategy’s use of put options can lead to losses because of adverse movements in the price or value of the underlying asset, which may be magnified by certain features of the options. When selling a put option, the Strategy will receive a premium; however, this premium may not be enough to offset a loss incurred by the Strategy if the price of the underlying asset is below the strike price by an amount equal to or greater than the premium. Purchased put options may expire worthless and the Strategy would lose the premium it paid for the option. The Strategy may lose significantly more than the premiums it receives in highly volatile market conditions.
The Strategy will invest in short term put options which are financial derivatives that give buyers the right, but not the obligation, to sell (put) an underlying asset at an agreed-upon price and date. The Strategy’s use of options may reduce the Strategy’s ability to profit from increases in the value of the underlying asset. The Strategy could experience a loss or increased volatility if its derivatives do not perform as anticipated or are not correlated with the performance of their underlying asset
KAM20260210
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