How PensionBee’s plans are performing in 2026 (as at Q1)

This blog is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing as at Q4 2025.

Q1 2026 began with market momentum from 2025, buoyed by AI-related gains and strong corporate earnings. However, as the quarter progressed, escalating inflation concerns amid Middle East tensions led to a cautious investor outlook, a sharp market sell off, and increased volatility. This made defensive sectors like energy and utilities see positive gains, along with gold as a safe haven.

Global equity markets varied, with developed markets declining and emerging markets seeing only modest growth. The energy sector performed strongly with surging oil prices as the conflict in the Middle East escalated. Technology and growth stocks underperformed as investor sentiment shifted, with value stocks outpacing growth stocks. UK fixed income (also known as bonds) faced pressure, as rising yields and renewed inflation concerns during the quarter impacted the bond market.

‍Performance data covers Q1 (1 Jan - 31 Mar 2026), sourced from money managers. Figures are before fees; past performance is not a guarantee of future performance.

PensionBee's default plans

4Plus Plan 

The 4Plus Plan is managed by State Street with an equity proportion of 31.9%^ (Q4 25: 81.7%). It’s the default plan for our customers over 50 years of age. The plan is actively managed for volatility in times of market turbulence, whilst targeting an annualised 4% return above the Bank of England base rate over a minimum five-year period. It aims to balance growth with stability for those approaching retirement or making regular withdrawals.

^Equity % at 31 March 2026, asset allocation can change on a weekly basis due to the plan’s actively managed component.

Global Leaders Plan 

The Global Leaders Plan is managed by BlackRock with an equity proportion of 100%. It’s the default plan for our customers aged under 50. The plan invests in around 1,000 of the largest public companies globally. It aims to maximise the growth of pension savings in the years before retirement. 

^ The plan was launched in February 2025, so the year-to-date figure isn’t available and has been replaced by since inception. Additional performance data for the 3-year and 5-year periods is also unavailable.

PensionBee's specialist plans

Climate Plan

The Climate Plan is managed by State Street with an equity proportion of 100%. The plan follows a Paris-Aligned Benchmark and aims to reduce the total carbon emissions produced by the plan’s companies by at least 10% each year.  

^ The new Paris-aligned strategy was launched in September 2024, so performance data for the 3-year and 5-year periods is currently unavailable.

Shariah Plan

The Shariah Plan is managed by HSBC and traded by State Street with an equity proportion of 100%. The plan invests in the 100 largest stocks traded globally that also comply with Shariah investment guidelines, as set by an independent Shariah Committee.

PensionBee's other plans

Tracker Plan

The Tracker Plan is managed by State Street with an equity proportion of 80%. The remaining 20% is allocated to fixed income. The plan offers a cost effective way to follow global markets as they move.

Preserve Plan

The Preserve Plan is a money market fund managed by State Street. The plan makes short-term investments in highly creditworthy companies to preserve money.

Learn more about how your pension is invested

Your pension is invested in a range of assets like company shares (equities), bonds, property and cash. Your pension balance fluctuates depending on how these assets perform. See below for a summary of global markets and the performance of key asset classes in Q1 2026. 

Global market summary in Q1 2026

It’s been a choppy quarter for markets, both stocks and bonds. Optimism around AI and resilient corporate earnings has been offset by rising inflation concerns and renewed geopolitical tension in the Middle East. Investor sentiment became more cautious as the quarter progressed.

January started on a positive note with the better-than-expected US and UK inflation rates, coming down from December 2025. But the sentiment quickly weakened through February into March when the US and Israel launched “Operation Epic Fury”, a joint strike on Iranian military sites and its leadership, which caught the market off guard. Equities fell sharply and Brent crude price spiked following a supply disruption in the Strait of Hormuz. Bonds sold off as rising oil prices fuelled inflation fears, pushing yields higher as investors anticipated prolonged elevated rates.

Geopolitical tensions escalated dramatically in March following Iran's retaliatory missile strikes on a US base, Israel, and the UAE. This surge in conflict, coupled with the Strait of Hormuz blockade causing severe oil supply disruptions, led to a sharp increase in Brent crude oil prices. As a result of these oil shocks and heightened geopolitical risks, global stock markets declined and UK government bond yields rose, shifting investor focus onto inflation data.

How did global stock markets perform in Q1 2026?

Please note that the performance figures above are reported in local currencies, except for the MSCI Asia ex-Japan, which is reported in USD due to the use of multiple currencies among its constituents.

Global equities experienced quite a volatile quarter, although some regions posted higher returns than others. Among developed countries, the UK gained the highest return during the quarter. The commodity-heavy UK FTSE 350 (an index that tracks the performance of 350 large and medium sized UK public companies) returned 2.5%. This was directly linked to the oil supply shock in the Strait of Hormuz, which boosted the revenues and profitability of mining and energy companies.

Another positive gain was Japan, with the Nikkei 225 (an index that tracks 225 of Japan's top blue-chip companies) posting 2.2%. Japan led the equity market when Prime Minister Takaichi’s Liberal Democratic Party (LDP) secured a majority of seats from the February general election. This is because many investors view this as a boost for supporting Takaichi’s pro-business policies. A weaker Japanese Yen further boosted growth in the export-oriented economy.

Other Asian and European markets also saw negative performance. The MSCI Asia ex-Japan (an index that tracks the performance of large and mid-size public companies across Asia, excluding Japan) and MSCI Europe ex-UK (an index that tracks the performance of large and mid-size

public companies in Europe, excluding the UK) indices fell by 1.1% and 2.2%, respectively. Although both regions had performed relatively strongly earlier in the quarter, their decline in March was largely due to the conflict in the Middle East. This downturn was focused on the consumer discretionary (also known as ‘Non-essential consumer goods’) sector, which is highly sensitive to inflation. The surge in oil prices, following the disruption in the Strait of Hormuz, led to uncertainty regarding short-term interest rate changes by central banks, including the European Central Bank (ECB)

US equity, measured by the S&P 500 (an index that tracks the performance of 500 of the largest public companies in the US), saw the weakest gain, falling 4.3% due to significant volatility, making it the worst quarter since Q3 2022. This was driven by two factors. The Middle East conflict in March, which dramatically deepened losses due to a sell-off and a surge in oil prices, caused a sharp tech sector pullback and investor fears surrounding mega-cap tech stocks' soaring spending on AI investments, which was a concern even before the war broke out.

‍

Q1 2026: From broad momentum to selective sector growth 

‍

As of 31 March 2026, data source from FE Analytics and EC Markets. 

The equity market in Q1 2026 was marked by a shift from broad-based market momentum to a more selective environment. As the geopolitical risk intensified and inflation concerns emerged in March, equity investors rotated away from sectors that are inflation-sensitive to sectors with higher company valuations, such as information technology and communication, leading to increased dispersion across sectors.

How did UK bond markets perform in Q1 2026?

UK bond markets struggled in the first quarter of 2026. This was because expected interest rate cuts from the Bank of England (‘BoE’) were delayed due to ongoing inflation with a stronger-than-expected economy. This caused bond yields to rise and led to overall negative returns, with performance mainly driven by its sensitivity to interest rate update expectations.

As of 31 March 2026, the 4Plus Plan’s bond allocation was 19.1% and the Tracker Plan's bond allocation was at 9.9%. Index Source: MSCI and Bloomberg. 

UK government bonds (also known as ‘gilts’) performed the worst, dropping 2.0% because rising yields caused their prices to fall, especially for longer-term bonds. UK investment-grade corporate bonds also struggled, falling 1.9%. This was mainly because rising gilt yields and the long duration of the bonds pushed their prices down, even though interest payments remained stable.

From rate cut optimism to caution

The chart above shows the daily changes in UK 2-year gilt and 10-year gilt yields and BoE rate updates over three months. At the start of 2026, investors expected the BoE to cut rates in the near term, which kept UK gilt yields low. This optimism kept two-year yields particularly low. However, by February, sentiment began to shift as inflation remained persistent and economic data proved more resilient than expected.

In March, the markets started to expect rate cuts later than anticipated. This was particularly noticeable after the BoE held its rate on 20 March, moving the general outlook from expecting early cuts to a more cautious view.

Conclusion

Overall, the first quarter of 2026 reflected a broad repricing of market expectations rather than a single shock, as investors adjusted to a more cautious outlook on valuation risk, interest rates, and geopolitical risk. Equities saw increasing dispersion across regions and sectors, while UK bonds weakened as gilt yields rose on delayed rate cut expectations.

For pension portfolios, diversification remained key in managing volatility, but performance was ultimately shaped by a mixture of evolving valuations, policy updates and geopolitical events across global markets.

Have a question? Get in touch!

Do you want to know more about your pension plan with PensionBee? Learn more about the top 10 holdings in your pension fund on our blog, which is regularly updated. You can also look at our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via [email protected]. 

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invested. This information should not be regarded as financial advice.

‍