Why Diversification is No Longer Optional?
Executive Summary
KDI Invest delivered a constructive start to 2026, with January return ranging between 2.9% and 4.5% (in USD terms) across the various risk dimensions. Performance was supported by the broadening equity markets, extending beyond the mega-cap technology stocks as international and emerging markets outperformed. Small-cap and cyclical segments also contributed positively despite the rotation out of concentrated growth exposures.
As we look ahead, the macroeconomic backdrop remains nuanced. U.S. growth continues at an above-trend pace, with weakening consumer confidence and the softening of the labour market highlights emerging vulnerabilities. The Federal Reserve’s decision to pause rate adjustments reflects a balancing act between moderating inflation and preserving economic momentum. Rising long-term yields could suggest that markets are gearing up towards a “higher-for-longer” rate environment.
Globally, we anticipate that geopolitics and policy development to remain key drivers of volatility in the coming months. Trade tensions, evolving tariff frameworks, together with broader diplomatic uncertainties may introduce episodic market swings and shifting capital flows. Intriguingly, the broadening of market participation beyond the technology sector signals a healthier dispersion of returns globally. In this environment, disciplined diversification and dynamic risk management remain central to navigating a resilient yet fragile expansion. Staying invested in globally diversified portfolios is key to withstand volatility while remaining aligned with long-term growth opportunities.
Fund Performance Highlights
The provided table offers information on the cumulative performance of selected KDI portfolios since their launch on February 15, 2022. The portfolio returns (in USD) range from 0.7% to 21.4%. In 2026, the portfolios recorded returns within a range of 2.9% to 4.5%.
In January, our portfolios rotated towards gold, further recognising its proven role as a defensive and diversifying asset. The addition typically performs well during market volatility and uncertainty. Our model also allocated capital to the emerging markets and smaller companies, signalling the need to diversify into long-term growth outside of the U.S.
Kindly note that the performance and asset class exposure illustrated above are derived from five proxy portfolios. The actual performance and exposure of your investment portfolio may differ due to the customisation made by our proprietary algorithms that tailors the investment to your unique risk profile, as well as the timing of market entry.
Disclaimer
Kenanga Digital Investing (“KDI”) is licensed by the Securities Commission of Malaysia as a Digital Investment Management Company. KDI is authorised to carry out the business of fund management blending innovative technology into automated portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act (CMSA) 2007.
Investment involves risk, including the possible loss of capital you invest. Past performance does not indicate future performance. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes, and may not reflect actual future performance. KDI does not assume any fiduciary responsibility or any liability for any consequences, financial or otherwise, arising from any transaction in reliance on such information. Investors should rely on their own evaluation or consult an independent financial, accounting, tax, legal or other professional advisers to access the merits and risks before investing.
Any forward-looking statements, predictions, projections or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to the market influences and contingent upon matters outside the control of KDI and therefore may not be realised in the future. No representation is made as to the completeness and adequacy of the information to make an informed decision.
Neither the information, nor any opinion, contained in this article constitutes a promotion, recommendation, solicitation, invitation by KDI or its affiliates to buy or sell any securities, investment schemes or other financial instruments or services, nor shall any security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This is not intended to be an invitation or offer made to the public to subscribe for any financial product or other transaction.
This information has not been reviewed by the Securities Commission of Malaysia.
