Global markets declined in the first quarter of 2026 as investor sentiment weakened amid rising geopolitical tensions, higher oil prices, renewed inflation concerns, and reduced expectations for near-term monetary easing. The Federal Reserve held policy steady during the quarter, leaving the federal funds target range at 3.50% to 3.75%.

U.S. equities declined in the first quarter, reversing some of the strong gains generated in 2025. The S&P 500 returned approximately -4.3% for the quarter, pressured by weakness in growth-oriented sectors and increased volatility late in the period. Small-capitalization
stocks outperformed, with the Russell 2000 rising roughly 0.9%, supported by broader market leadership and value-oriented performance.

International equities were mixed but generally outperformed U.S. large-cap equities. The MSCI EAFE Index declined approximately -1.2%, while emerging markets were roughly flat, with the MSCI Emerging Markets Index down about -0.2%. The broader MSCI ACWI ex U.S. Index finished modestly lower.

Fixed-income markets were little changed as Treasury yields rose and credit spreads widened modestly from tight levels. The Bloomberg U.S. Aggregate Bond Index returned approximately -0.1% for the quarter. High-yield credit was more resilient than longer-duration
investment-grade fixed income, reflecting still-contained default expectations despite softer risk appetite late in the period. The 10-year U.S. Treasury yield ended March near 4.3%.

Commodities advanced sharply. The Bloomberg Commodity Index gained approximately 24.4%, driven primarily by energy and precious metals amid heightened geopolitical risk and the related oil price shock. Gold advanced solidly during the quarter, supported by safe-haven demand, while crude oil rose as Middle East tensions raised concerns over global supply availability.

As of March 31, 2026, OCERS’ portfolio had a market value of $28.1 billion, up from $27.6 billion at the end of the third quarter. OCERS’ portfolio generated a quarterly return of 1.8% relative to the policy benchmark return of -0.1%.