Dynamic Alpha Macro Fund January 2026 Overview

This Month’s Performance

The Dynamic Alpha Macro Fund (DYMIX) gained 14.42% in January, materially outpacing the S&P 500 Total Return Index (1.45%) and the S&P Target Risk Balanced Index (2.04%). With a strong start to the year, the Fund is up 14.42% year-to-date and 41.37% over the past 12 months. This strong performance shows that our dual-strategy approach can generate equity-like returns without relying on the same risk drivers as traditional benchmarks.

Performance was driven primarily by the global macro sleeve, which benefited from our positioning across currencies, metals, and energy, along with select short exposures, while rate sensitivity was a modest headwind. Importantly, January’s gains were broad-based and rooted in multiple, non-correlated themes which is exactly the profile we seek as we balance strategic U.S.-equity exposure with an actively managed macro book.

A month like January illustrates why we manage the Fund tactically. Rather than riding a position and hoping gains hold, we actively harvest profits and redeploy into the next opportunity our process identifies. Hope is not a strategy. Disciplined approach is.

In the discussion that follows, our Global Macro Manager red-teams our core theses, highlighting what could challenge them and how we are pressure-testing risk as the data evolves.

Red Teaming the portfolio

The process of ‘red teaming’ refers to a war-game exercise: a “red team” uses tactics to infiltrate and attack an organization’s processes and defenses. This simulated attack allows the “blue team” to challenge their assumptions and better understand their blind spots.

Our research process forces us to continually pressure test our investment theses; this process of red teaming is one of several ways that we measure risk in the portfolio. In this letter, we plan to go through our current portfolio, presenting counter arguments for our core views – the very views expressed in prior letters.

Let’s start by outlining the themes we carried in January:

[1] At the start of the year, the core of our portfolio could be summed up as: long silver alongside a yield curve flattener (via long 2-year Treasuries and long 10-year Treasuries).

[2] In addition, we carried idiosyncratic, short-term positions: short coffee and short cattle. These are non-correlated to other positions and function as portfolio diversifiers. Late-month, we added a long corn position to round out our agricultural trades.

[3] We held a short USD theme, which is currently expressed via long British pound (GBP).

[4] Within energy, we held a newly incepted long crude oil position.

Let’s now red team these themes and trades.

Long silver

The silver market has defied all predictions by leading financial experts that it is in a bubble.  In fact, very low speculative positions on the COMEX, alongside true physical shortages for industrial uses, lead us to believe that the recent move has been underpinned with a greater level of underlying fundamental demand than any other bull market in silver’s history. That said, there is certainly some degree of speculation driving this move. And despite the underlying physical demand, current price levels incentivize thrifting, substitution, and demand destruction from industrial consumers. As a result, while still bullish, we trimmed our position throughout the month and ultimately closed it out completely prior to month-end. 

Long Treasuries

Given that we are positioned long across the yield curve, in both 2-year and 10-year Treasuries, any combination of the following would derail our view: an acceleration of economic growth; a resurgence of inflation; and/or a large retrenchment in foreign purchases of Treasuries, or even outright selling of Treasuries. Examining each:

• Accelerating economic growth: in our minds, this is the most reasonable outcome that would work against us. Despite pressure on the U.S. consumer, final spending across most income cohorts remains strong. Any sign that growth broadens out past the AI/datacenter build may well force the Fed to stop cutting rates, pause, and potentially even hike again.

• Resolute inflation seems least likely, as base effects and the lack of corporate price hikes from tariffs imply that inflation – though sticky around 3% – should continue to grind lower this year.

• A fiscal crisis with commensurate outright selling of long-duration Treasuries by foreigners is not a risk to ignore. Repatriation of capital to fund defense and social spending at home in Europe, Japan, and South Korea would fit this template – we are watching carefully as this could accelerate this year and would drive long-end Treasury rates above 5%.
  

Short cattle

Our short cattle thesis is predicated on slowing end consumer demand, full stop. We acknowledge that the combination of persistent drought and uneconomic ranching conditions have led to the smallest domestic cattle herd since the 1950s. This is our easiest trade to red team: simply put, if the herd is not rebuilt, and if consumer demand for steak remains strong, there is really nothing to stop a renewed bull leg in what is now a 5-year long bull market in cattle. Indeed, it may very well take even higher prices to finally force the average U.S household to finally cut back on red meat  and stick to pork and chicken for protein sources.

Short coffee

Our bearish thesis on coffee relies on a steady supply of new crop beans from Brazil. Yet this recovery is fragile, as drought in Brazil and excess rainfall in Vietnam back in 2022-2023 led to substantial damage to the coffee crop in each nation. Exchange inventory has consistently declined in recent weeks and currently stands at only 450k bags, while rainfall in Brazil’s coffee growing region is 30% below historical averages. The 2026-2027 coffee crop is in the critical bean phase, where higher moisture is crucial for a successful harvest. We are watching all these bullish factors carefully.

Short U.S. dollar

Our core short position on the dollar is not based on the dollar losing its reserve currency status, but rather on the premise that the U.S. will run a more negative real rate policy relative to other developed market central banks; currencies are relative cross rates priced at the margin. We could be wrong in two ways: near-term the dollar remains oversold, and any rotation of equity market performance back in favor of the U.S. might drive a counter-trend rally in the dollar. Longer-term, if the U.S. continues to be the “cleanest dirty shirt in the laundry”, and it turns out that the ECB and BoJ wind up running more dovish policies, the dollar may very well continue to strengthen for years to come.

Oil: one of the last value investments left

In January we initiated a long position in crude oil futures. Red teaming this position is easy: there is a massive quantity of oil in storage, particularly in floating storage on water (see the chart below for inventory growth over the past half-year). OPEC – in particular Saudi Arabia and the UAE – have well over 4 million barrels of spare capacity that can be brought online at a moment’s notice. To add a final measure of insult to the soggy oil price, the current U.S. administration has made it clear that they want to increase supply dramatically from Venezuela. 

Our view? These are all short-term bearish factors that may very well be fully encapsulated in current oil prices. Longer-term, a lack of sustaining CapEx in the oil and gas sector over the past ten years – coupled with S-curve demand growth in middle income countries such as Malaysia and Kenya – implies a multi-year bull market in the price of oil likely lies ahead.

OPEC+ oil inventories in June                                      OPEC+ oil inventories today

Sources: SG Cross Asset Research, Kpler

We look forward to reconnecting again in early March. Please feel free to reach out if we can provide additional clarification on specific ideas or the portfolio more broadly.

As always, we continue to be nimble. If the data and/or our views change, we can pivot our positioning and find other trades within the 40+ markets we have available. This is also why we maintain a strategic allocation to U.S. equities in our overall fund strategy, balancing a buy-and-hold approach with active global macro long/short positions. 

We Are Here To Help

We appreciate your continued trust and partnership and look forward to updating you on our progress in the coming months. Please feel free to reach out if we can provide additional clarification on specific ideas or the portfolio more broadly.

If you are a financial advisor and would like more information on our multi-dimensional approach towards asset management, you can download our white paper titled Busting Seven Risk and Return Myths by visiting our website at DynamicWG.com, or email us at info@DynamicWG.com. If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor, if so desired.