2026 Portfolio Midyear Review: +5.2% in CHF, CAPE 42.7, No Fed Cuts - philippdubach.comSkip to main contentphilippdubach<br>Quantitative finance, AI, and the economics underneath.

The portfolio is up 5.2% in CHF through May 29 on a time-weighted basis, roughly matching a global 60/40 (+5.4%) and trailing the S&P 500 in CHF (+9.0%), after a drawdown of nearly 4% in late March on a Middle East oil shock.<br>The clean miss was rates: I built fixed income around two to three Fed cuts and got zero, as the oil spike pushed US inflation back toward 4% and the bond sleeves came in flat to slightly negative in CHF.<br>Three of four rotation calls paid (Emerging Markets +20.7%, US Small Cap +13.2%, Japan +13.1%), but the Europe overweight lagged at +4.8%, behind US large-cap (+9.9%); EM won through Korean and Taiwanese chipmakers, not the Chinese tech I expected.<br>I made three small changes, not a reversal: gold 5%->6%, crypto 4.5%->3.5% (it fell 19% and didn&rsquo;t hedge), and a switch of the Japan sleeve into a CHF-hedged share class after the yen ate most of Japan&rsquo;s local gain.

×Last December I rebalanced around five theses for 2026. Five months in, the rotation out of US large-cap and into everything cheaper has mostly paid, with one exception. As always, this is a personal-portfolio review and in no way a recommendation.<br>Portfolio performance so far<br>Through May 29, the portfolio is up +5.2% in CHF on a time-weighted basis. A fairly-constructed 60/40 benchmark (60% MSCI ACWI in CHF, 40% global aggregate bonds CHF-hedged) is up +5.4% . The S&P 500 in CHF, total return, is up +9.0% . So the portfolio roughly matched the diversified benchmark and trailed pure US exposure by almost four points.

×I was up modestly through January, gave it all back and then some by late March, bottomed near -4% , and climbed steadily after. A Middle East conflict in late February and a brief threat to the Strait of Hormuz sent oil sharply higher, and a year that was supposed to be about disinflation turned, for a few weeks, into one about sticky prices. I guess that single event reset the macro backdrop for everything that followed.<br>The 2025 outperformance, when this same approach beat the S&P 500 by a wide margin in CHF terms, was driven by the dollar&rsquo;s collapse against the CHF. USDCHF fell about 11.5% last year. So far in 2026 it has fallen about 1.2%. The FX tailwind that made the strategy look brilliant is gone, and the portfolio is doing what it should in a year when the diversifier isn&rsquo;t paying much: keeping pace with a balanced benchmark and trailing pure US.<br>What worked, what didn&rsquo;t

×Emerging Markets returned about +20.7% in CHF, the single biggest contributor relative to weight. US Small Cap +13.2% , Japan +13.1% . The rotation thesis, that the valuation gap between US large-cap and almost everything else was too wide to ignore, paid in three of the four sleeves where I added exposure.<br>The part I only half-anticipated is what drove the EM win. It wasn&rsquo;t Chinese stimulus, which is what I leaned on in December. It was the Korean and Taiwanese chipmakers at the heart of the AI supply chain. My broad EM holding caught that; my dedicated Chinese-tech slice did not. I was right to own EM and right about Asia, just for the opposite reason I wrote down - fair enough.<br>The fourth rotation was Europe, and it didn&rsquo;t deliver. Up +4.8% in CHF, it trailed US large-cap (+9.9%) by five points and trailed every other rotation by eight to sixteen. Germany&rsquo;s fiscal pivot is real (€500bn infrastructure fund, €400bn defense, €600bn in private commitments). Citi&rsquo;s European equity strategy team kept its overweight call and projects German EPS growth at a 13% CAGR through 2029. None of that has shown up in prices yet. A cheap market can stay cheap until a catalyst forces the re-rating, and the catalyst I was counting on hasn&rsquo;t done its job (so far).<br>Bitcoin and Listed PE were the worst calls, down about 19% and 13% in CHF. Crypto I&rsquo;ll come back to, because what it did in March changed how I size it. Listed PE I&rsquo;m watching more carefully, since the discount-to-NAV widening that drove the drawdown isn&rsquo;t a thesis call gone wrong so much as the trade getting more crowded into a year of higher dispersion.<br>Valuations got more extreme, not less<br>The CAPE was the spine of the December argument. The S&P 500 traded at 40.5x cyclically-adjusted earnings, more than twice the long-run mean of 17.3, and the gap had to close one way or another, through multiple contraction or earnings growth.

×It closed in neither direction. The CAPE is now about 42.7 , up from 39.8 in December. That puts US large-cap closer to the dot-com peak (44.2 in December 1999) than at any point since. The compression I expected didn&rsquo;t happen; the multiple expanded while earnings kept up, and the rest of the world stayed cheaper.<br>Concentration is messier. NVIDIA, grew from 7.2% to 8.17% . Apple sits at 6.70%, Microsoft...