Nicola Wealth Q2 Outlook 2026: Discipline in an Uncertain World

On April 14, 2026, a full room of clients were welcomed to Nicola Wealth's Q2 Outlook, the first in our new quarterly format. The evening featured presentations from our leadership team on risk, diversification and opportunity in a world of growing uncertainty. 

2026 opened with a similar set of worries still hanging over the markets from 2025: tariffs, stretched public asset valuations, and persistent government dysfunction and deficits, especially in the United States. But rather than fading, those concerns were quickly overtaken in the first quarter by new concerns surrounding the American military action abroad and a resulting spike in oil prices.

This moment has Nicola Wealth’s leadership team encouraging investors to prepare for a potentially jarring reversion to the mean, following three years of exceptional public market returns. At the same time, the team offered reassurance that the firm’s disciplined approach to true diversification can help smooth out the bumps, uncover new opportunities and continue building wealth for clients over the long term.

CEO Chris Nicola set the tone for the night: 

"Markets move forward, economies evolve, and with each cycle comes a new set of opportunities. But building lasting wealth has never been about reacting to the moment. It's about having a clear plan, a disciplined approach, and the perspective to look beyond short-term noise." 

Preparing for Volatility: The Case for Diversification and Cash Flow 

First up, with a big-picture perspective was executive chair and chief investment officer John Nicola.  He touched on a convergence of global risks, from ongoing and emerging geopolitical conflicts to a looming demographic crash in many developed economies, and growing signs of a bubble in AI-related spending. Taken together, Nicola cautioned that the confluence of risks could set the stage for a potential “Minsky moment,” when a single falling snowflake triggers an avalanche of collapsing asset prices. 

His message to investors was clear: “Think about playing defence. This is a very dangerous period of time.”  Nicola went on to emphasize the importance of prioritizing “the cash flow, the cash income, the rents and dividends and interest you can earn in your portfolio.” In his view, these are the fundamentals that should form the backbone of long-term portfolio security, particularly in periods when market confidence is tested.   

Strategic Positioning Amid Rising Uncertainty 

Deputy CIO Will John then outlined how Nicola Wealth is positioning portfolios for what could be a choppier second quarter. In the first quarter, the firm’s public-asset funds generated a modest 0.6% return, while private capital earned a more robust 2.8% and real estate, a “modestly negative” -1% return*. Given the ongoing weakness in the U.S. dollar, the firm is selectively reducing its exposure to the greenback across portfolios, though not eliminating it entirely. The currency can still serve as a “safety blanket” during periods of heightened risk, John noted.

Will John also provided context on the recent transition of the Nicola Value-Add Real Estate Fund. Following a period of elevated redemption requests, the Nicola Value-Add Real Estate LP entered a temporary restriction period as part of a measured and orderly wind-down process. Over the next five years, the fund will be closed and replaced with closed-ended investment vehicles designed to function more effectively when the markets are under stress. In an open-ended structure, elevated redemptions can limit managers’ ability to reinvest capital into new opportunities, he explained, which is an important consideration as real estate begins to emerge from its recent downturn.

“And right now we are in an environment that we believe is full of opportunity,” John said. While he acknowledged that the Nicola Core Composite has trailed a simpler 60/40 stock-and-bond portfolio over the last three years, he emphasized the firm’s confidence that its more broadly diversified approach will soon reassert itself, as it has over longer time periods. With the mean reversion highlighted earlier by John Nicola, which may unfold over the coming years, the focus, he said, is on remaining nimble and tactical.

Public Assets in a Changing Market Regime 

Turning to public markets, portfolio manager, Ben Jang observed that the so called “Mag-7 stocks have recently become the Lag 7,” underperforming other areas of the market as “High-valuation growth names are being hit hard now,” he said. The strongest gains are coming from energy stocks as oil and gas prices soar. There, Nicola Wealth has been selectively trimming the strongest performers and redeploying capital into energy opportunities with greater long-term upside. The team is also focusing on “HALO” assets, or heavy asset, low-obsolescence businesses that are protected against AI disruption. 

Jang also noted that both stocks and bonds declined in March, echoing an uncomfortable pattern last seen in 2022. While the firm expects interest rates to remain largely range-bound for the foreseeable future, he cautioned that risks remain. A recession or stagflation is possible, should geo-political tensions, particularly the Iran war, intensify.   

Private Capital: Staying Disciplined as the Noise Grows Louder 

“Private capital is not immune to what’s going on in the world,” said Rob Olsen, head of private capital, as he opened his discussion on the asset class. Mortgage growth slowed in the first quarter, particularly in Canada, but deal-flow overall remained strong.  The secondaries market continues to expand at a rate of ~25% a year and Nicola Wealth’s private equity team successfully executed two highly lucrative exits. 

Olsen also addressed growing investor nervousness around open-ended private credit funds, which drew significant retail curiosity after interest rates rose sharply in 2022. He noted that two syndicated loan funds that declared bankruptcy last fall were atypical of the market, but comments by JP Morgan Chase’s CEO drove a level of panic that caused a number of fund managers to restrict redemptions.

“The gating of funds caused more of the retail investors to seek redemptions,” Olsen said. “Was this overblown?  We think it was.”  

In his view, underlying fundamentals such as leverage levels, default rates and interest coverage have not meaningfully changed and asset valuations are holding. Risk is further mitigated through diversification: no single Nicola Wealth holding represents more than 3% of its private debt portfolio. Moreover, the firm brings long-standing experience in open-ended private-credit strategies that predates the post-pandemic surge in investor demand.

“We’re investing in one of the least risky parts of private credit and not what the media has been talking about,” Olsen said. With strong tailwinds supporting infrastructure and private equity, he emphasized that Nicola Wealth remains confident in its positioning.  “We’re not reducing what we think we should be doing in this area.” 

Real Estate: Positioning Ahead of the Recovery 

At Nicola Wealth, that resilience starts with discipline. It means prioritizing cash flow over speculation, maintaining true diversification across public and private assets, managing liquidity carefully, and avoiding excessive concentration in the most expensive parts of the market. These choices may not always feel exciting, but they are designed to deliver stability when confidence is tested.

Income that can be reasonably anticipated, whether from dividends, rents or interest, has historically proven more dependable than short-term movements in asset prices. Over time, that dependability can compound into not just financial resilience, but emotional confidence as well, helping investors stay invested through inevitable periods of volatility.

The Bottom Line 

Markets may be entering a more unsettled phase, but uncertainty itself is not the enemy of long-term investors. Poor decisions made in response to uncertainty are. 

History tends to reward portfolios that remain diversified, cash-flow focused and aligned with investor behaviour, particularly when optimism runs high or sentiment turns sharply negative. In environments like today’s, discipline matters more than forecasts.

To watch the full Nicola Wealth Q2 Outlook Event, click here.