For the quarter ending March 31, 2026, the FPIF investment portfolio returned -1.0% and policy benchmark returned -1.3%. For the fiscal year to date, the FPIF investment portfolio returned 7.2%, slightly outperforming the policy benchmark of 6.6%. The one-year trailing return for the FPIF investment portfolio was 16.3%, outperforming the actuarial rate of return of 7.125% and the policy benchmark of 15.1%. All returns are net of fees.
The U.S. economy began 2026 on stable footing, with a resilient but gradually cooling labor market and softer consumer spending. Rising energy prices and geopolitical tensions, especially late‑February strikes on Iran, intensified inflation risks and pushed the Federal Reserve to maintain a cautious, data‑dependent policy stance. As the second quarter began, growth remained moderate, but higher oil prices, persistent inflation pressures, and global instability increased concerns about a more challenging economic environment ahead.
The U.S. bond market ended the first quarter flat after a sharp March sell‑off driven by rising yields amid geopolitical tensions and higher oil prices. Renewed inflation concerns pushed markets to scale back expectations for 2026 rate cuts, while widening credit spreads reflected both global uncertainty and anxiety over technological disruption. Despite elevated risks, the overall fixed‑income outlook remains supported by higher starting yields, even as fiscal, geopolitical, and policy challenges grow more complex.
U.S. equities saw a sharp shift in leadership in early 2026, with mega‑cap growth stocks weakening while value and economically steadier sectors outperformed. Markets were driven by two forces, rising concerns about AI‑related disruption in the technology ecosystem and a surge in geopolitical tensions following U.S. and Israeli strikes on Iran. With the latter pushing oil prices higher and reignited inflation worries.
International equities started 2026 with strong momentum, with many non‑U.S. indices posting double‑digit gains through February. That strength faded in March as markets reversed sharply, erasing much of the early‑year performance. The shift reflected how sensitive international stocks were to disruptions that affected global trade flows and energy supply, which weighed earnings expectations. While a more stable backdrop could help restore confidence, volatility is likely to persist, keeping investors focused on fundamentals, diversification, and careful risk management.
March 31, 2026 Investment Update
