Q1 2026 Market Commentary

The market narrative in Q1 2026 was defined by a distinct “tale of two halves.” During the first two months, investor sentiment was fixated on two themes: the "SaaSpocalypse"—a dramatic valuation reset of software-as-a-service (SaaS) companies in the wake of AI disruption—and the continued concentration of core indices (S&P 500). Prior to February 28th, a prevailing expectation of declining interest rates propelled major indices—including the S&P 500, MSCI ACWI, and Russell 2000—to a robust start.

However, the February 28th geopolitical events in Iran abruptly severed that trendline. We witnessed a sharp pullback since the attacks, with international equities (MSCI ACWI ex-US) declining 10.7% and the S&P 500 Index down 5.0% through quarter-end. Even traditional safe havens failed to provide cover; Gold declined considerably, and Fixed Income saw absolute losses as inflation fears resurfaced and rate-cut expectations were pushed further into the horizon.

The result was a challenging Q1, marking the weakest performance across most major indices since Q3 2022. Q1 performance for major indices:

• S&P 500: -4.3%
• MSCI ACWI: -3.1%
• Russell 2000: 0.9%
• Gold: 8.6%
• Bitcoin: -24.6%

While investing is a long-term discipline, we recognize that the "long term" is a sequence of short-term shifts. Our approach remains steady, yet we are being responsive to these evolving dynamics. Here is where our focus lies:

The "SaaSpocalypse": Software valuations now trade at a relative discount to the S&P 500 for the first time since the Global Financial Crisis, falling well below their historical 30–50% valuation premium. The market fears that AI will compress margins and upend seat-based business models. While these risks are real, with disintermediation in fact democratizing pricing & access in some cases, we believe the market may be overreacting, indiscriminately penalizing the entire sector. We believe top-tier active managers adept at doing the granular work to identify companies with durable moats—regulatory entrenchment, essential workflows, and proprietary data—and where AI can make those ‘SaaS’ companies more valuable, will find compelling buying opportunities in this market. Generating alpha requires "zigging" when the consensus "zags," and we believe this category currently offers attractive entry points for the most discerning investor.

Market Concentration: The ten largest companies in the S&P 500 now represent nearly 40% of the index. With the potential additions of SpaceX, followed by Anthropic and OpenAI later this year, concentration could approach 50%. Effectively, the S&P 500 no longer offers true diversification. While these "Mag 7" titans are among the most impressive compounders in history, this monolithic narrative rhymes uncomfortably with the "Nifty Fifty" era of the early 1970s. Back then, premier names like IBM and Disney traded richly, and the market narrative centered on the concept of “One-Decision Stock” - deeply moated companies that will continually compound. During the 1973-74 bear market, many of those names declined 70+%! While some of today’s mega-cap tech companies boast balance sheets significantly stronger than those of the darlings of the 1970s, history reminds us that no asset is immune to valuation gravity when growth expectations become disconnected from reality.

Navigating Geopolitical Fallout: Oil prices have surged nationwide. Increased volatility, often exacerbated by single social media posts, has made for a treacherous environment. We are: (i) tilting towards reducing exposure to Europe and Asia, as those markets will be more impacted the longer the geopolitical crises continue, (ii) extending our dollar-cost averaging (DCA) duration targets for clients with high cash balances to better time and take advantage of current volatility, and (iii) adding exposure to market-neutral strategies to lower client portfolio beta.

Investing is never easy; no seasoned investor we engage with would claim otherwise, regardless of the environment. Today is no different. While the full extent of the second- and third-order effects of the current geopolitical crisis remains unknown, we find clarity in our core tenets: a long-term horizon, disciplined diversification, and the relentless pursuit of idiosyncratic alpha. By partnering with premier managers and investing in high-quality companies with robust growth profiles, we stay focused on our north star.

Important Disclosures

_{One Oak Holdings LLC d.b.a. OneWell (“OneWell”) is a registered investment adviser registered with the state of Maryland. Registration does not imply a certain level of skill or training. This material has not been approved or verified by the SEC or any state securities authority.}

_{This publication is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security or investment strategy. The views expressed reflect the judgment of the OneWell Investment Committee as of the date of publication and are subject to change without notice.}

_{Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Diversification and asset allocation do not ensure a profit or protect against loss.}

_{References to specific securities, asset classes, indices, or investment vehicles are for illustrative purposes only. Indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Forward-looking statements are inherently uncertain and actual outcomes may differ materially.}

_{Investments in alternative and private assets, including private equity, private credit, real estate, commodities, and digital assets such as Bitcoin, involve additional risks, including illiquidity and valuation uncertainty, and may not be suitable for all investors.}

_{Investment advice is provided only pursuant to an executed investment advisory agreement. OneWell’s Form ADV, Part 2A is available upon request or at adviserinfo.sec.gov.}

_{© 2026 One Oak Holdings LLC. All rights reserved.}