Q4 2025 Market Commentary: Navigating Concentration and Expanding Opportunity

2025 was a banner year for public equities, all the more remarkable as it followed the significant momentum of 2023 and 2024. Our core benchmark, the MSCI ACWI, delivered a total return of 22.9% for the calendar year and other global indices also performed well:

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As we look toward 2026, our views are informed by a synthesis of global macro research and internal analysis. We largely concur with the Goldman Sachs Investment Strategy Group’s view that “US Preeminence” remains the secular baseline. Despite the fiscal and geopolitical volatility of 2025—including tariff implementation and a historic government shutdown—the fundamental pillars of the US economy (innovation, human capital, and scale) remain intact.

However, we are closely monitoring the "fat tails" of market concentration. Analysis from Torsten Slok at Apollo Insights and our internal models highlight:

• The Concentration Risk: The "Magnificent 7" now represent 33% of the S&P 500 market cap, up from 25% in 2022.
• Echoes of 2000: The TMT sector’s 46% weight in the S&P 500 has now surpassed the peak levels of the Dot-com bubble.
• Valuation Premia: The top 10 constituents trade at a trailing P/E of 38x, a stark contrast to the broader index's 27x, both of which sit well above 30-year averages.

To navigate this "expensive but resilient" landscape, we are implementing three tactical shifts:

1. De-concentration via Weighting: To mitigate the extreme idiosyncratic risk of the top 10 holdings, we are actively transitioning portfolios toward a 75% Market-Weight / 25% Equal-Weight blend. This preserves our exposure to winners while providing a structural buffer against a potential reversal in mega-cap momentum.
2. The Small-Cap Rotation: After years of relative stagnation, small-cap earnings growth is inflecting upward. We find current entry points attractive and are increasing our allocation to high-quality small and mid-cap managers.
3. Alpha in the Lower Mid-Market: Beyond public markets, our enthusiasm for lower mid-market (LMM) Private Equity remains high. The current fundraising "winter" for GPs has created a buyer’s market. Top-tier managers are facing less competition for founder-led businesses, allowing them to acquire high-quality assets at attractive entry points.

We stay committed to our goal of growing your capital over the long term. We closely monitor the risks we identify while also adjusting our portfolios to capitalize on areas with strong long-term growth potential.

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.}

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