How I Navigated Market Chaos to Grow My $1.8M Daedalus Income Portfolio by September 2026—And What Most Investors Missed

Ever wonder what it takes to build a portfolio that not only weathers the storms but thrives through economic chaos, inflation spikes, and the unpredictable twists of global markets? Welcome to the September 2026 update of my Daedalus portfolio — a real-life blueprint for inflation-adjusted, lifelong income designed with the grit and strategy to outlast even the toughest financial climates. If you’ve ever questioned how to sustain your essential living expenses without constantly tweaking your investments, this is the kind of transparency and deep dive you don’t want to miss. We’re peeling back the layers on returns, shifts, and strategic decisions that shape a portfolio holding steady at nearly $1.83 million SGD — all while the Federal Reserve plays bond market maestro and small caps take their hits. Buckle up for an insider’s look at how a carefully calibrated mix of global equities, bonds, and systematic strategies are not just surviving but aiming to secure perpetual income. Curious? Let’s decode the performance, the philosophy, and the numbers behind a portfolio that aims to last a lifetime. LEARN MORE

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Here is the update for my Daedalus portfolio for Sep 2026. If work is not too busy, I will try to provide an update where possible.

I explained how I constructed this portfolio in Deconstructing Daedalus Income Portfolio and Why I Currently Invest in These Funds for Daedalus. You might not understand what I wrote below if you haven’t read this post.

All my personal planning notes such as income planning, insurance planning, investment & portfolio construction will be under my personal notes section of this blog.

You can also find the past updates similar to this in the personal planning notes section.

Portfolio Change Since Last Update

The portfolio was valued at $1.880 million at the end of August and is at $1.833 million at the end of September.

We reported a portfolio change of -2.5% or -$47,000 for September 2026.

The portfolio is valued in SGD because that is the currency that I would most likely be spending on.

As of 2nd October 2026, the portfolio is valued at $1.837 million.

Portfolio Attribution – Why did the portfolio do better/worse compare to last month [or a year ago if this is a December update]?

We all want to know what cause the portfolio to do better or worse. If you have just one fund that covers the MSCI World, or you have a bunch of funds, would you know if it did better or worse?

In this section, I try my best to explain the portfolio performance in my way.

Here are the primary security holding returns for the month-to-date and year-to-date for the funds that I own [the first table] and reference benchmark ETFs [the second table]:

This table shows the fund holdings denoting the month-to-date and year-to-date performance of the funds that I own.

The Major Index ETFs is present to compare the performance. Just to be clear, I do not own the major index ETFs and you should see the Daedalus Income Portfolio Holdings table.

The returns of all funds are in USD. This includes the performance of the Dimensional funds, which I use the returns of the USD share class so that the returns are comparable. I have also listed the major index ETF performance for comparison.

a. General Equity Performance

September was a month where the bond market called the shots. The Federal Reserve under Kevin Warsh raised rates by 0.25% to a range of 3.75% to 4.00% on 16 September, its first hike since 2023, and signalled one more before the year ends. Oil was the reason. With traffic through the Strait of Hormuz still far below normal and fresh attacks on tankers and Saudi pipelines, Brent spent most of the month above $95 and touched $108 near the end. Inflation that was supposed to fade is sticking around, and the Fed decided it could not wait.

Bond investors did not like what they saw. The US 10 year yield went from 4.75% to 5.29% in one month, and the 30 year pushed above 5.6%, a level we have not seen since 2002. When you can get 5% plus from a government bond, the bar for owning stocks goes up. That is the simplest way to understand why most share prices fell even though company earnings are still decent.

In the US, the headline number hid what really happened. The S&P 500 only slipped about 0.5%, but that is because a handful of large AI and tech names held up. The average stock did much worse. The equal weighted S&P 500 lagged the normal index by 4.6% in the month, one of the widest gaps in over 20 years. Banks and financials, which you would think benefit from higher rates, fell more than 6% as investors worried about loan demand and the cost of funding. The Dow lost over 4%.

Small caps had a rough month. The Russell 2000 fell more than 5%, and the S&P 600 fell over 6%. Smaller companies borrow more, borrow shorter and have less pricing power, so a jump in rates hits them first. This is the same story that has played out a few times in this cycle. Whenever rates spike, small caps give back a chunk of what they made.

Outside the US, Europe had its first losing month in six, with the STOXX 600 down about 2.5% as long dated yields in Germany and France also climbed to multi year highs. Japan was the bright spot, with the Nikkei ending the month slightly up on the back of chip stocks. Emerging markets were mixed. India had its worst month since March, falling about 6% as higher oil prices hurt an energy importer. Hong Kong fell around 4%. Taiwan and Korea held up better because so much of their markets are tied to AI chip demand, but Korea had a weak quarter overall.

For a Singapore investor, the currency was not a big factor this month. The US dollar ended September roughly where it started against the Singapore dollar. So what you saw in your portfolio was mostly what the markets did, and for most diversified investors that meant a loss of 1% to 3% in September, with year to date returns still comfortably positive.

b. Developed Equity Performance

There were a few multifactor funds targeting the developed equities region in Daedalus:

I hope you look at them as a diversified group of equities that gives exposure to developed large cap and mid cap global equities. They also systematically gives exposure to cheaper and more profitable companies with a little bit of short term momentum.

My developed world funds had a mixed month. IWDA, which tracks the MSCI World, lost 1.40%. IFSW was the best of my holdings, down only 0.84%, and AVGC lost 2.09%. JPGL and GGRA were the weaker ones, down 3.99% and 3.35%. Dimensional Global Core Equity, which I do not own, fell 2.72%.

This pattern makes sense. When a few mega cap tech names carry the market, any fund that tilts toward smaller, cheaper or more evenly weighted stocks will lag. JPGL spreads its money more evenly across value, momentum and quality stocks, so it felt the narrow market more. GGRA has meaningful exposure to dividend payers and financials, which were the worst sector in the US.

Year to date, IFSW (16.83%) and AVGC (14.68%) are still ahead of IWDA (11.88%). JPGL at 11.01% is close to the index. GGRA at 5.82% remains the laggard of the group and is something I keep an eye on.

c. Developed + Emerging Markets Equity Performance

The Dimensional World Equity sits as part of my SRS account. It is a single fund that gives exposure to the developed and emerging markets large cap and mid cap stocks.

You should compare this against the MSCI All Country World and MSCI All Country World IMI.

Dimensional World Equity fell 2.59% in September. ACWD, the large and mid cap all country index, lost 1.32%, and IMID, which adds small caps, lost 1.71%.

The difference between ACWD and IMID tells you smaller companies did worse than large ones. Dimensional tilts further toward smaller and cheaper companies than IMID does, so it fell more. This is the cost of a value and size tilt in a month like this.

Year to date, Dimensional World Equity is still ahead at 13.77% versus 13.06% for ACWD and 13.29% for IMID. One month of underperformance has not erased the lead.

d. Emerging Markets Equity Performance

AVEM and EMSD is my emerging market exposure. One is a large, mid and small cap fund that should tilt towards value and profitability. The other is a pure emerging market small cap with no factor tilts.

Emerging markets held up better than developed markets this month. AVEM lost 0.96%, slightly better than EIMI which lost 1.17%. EMSD, my emerging market small cap fund, lost 3.70%.

The large AI related names in Taiwan and Korea cushioned the broad EM indices. Smaller EM companies do not have much of that exposure and are more tied to local economies like India, which had a very poor month, so EMSD fell more.

Year to date, emerging markets are still the strongest part of my portfolio. AVEM is up 20.07% against EIMI at 21.45%, a small gap that mostly comes from AVEM holding less of the very largest chip stocks. EMSD is up 11.38%.

e. Small Cap Equity Performance.

About 32% of the portfolio or 36.5% of the equity allocation is invested in Global Small Cap Value or Value-weighted funds. You should look at Dimensional Global Targeted Value, AVGS. USSC used to be a significant allocation but no more. I still leave the performance in for this year just so you can contextualize its performance.

Small caps fell across the board, between 4.5% and 6.5%. My holdings were not spared. AVGS lost 4.66%, Dimensional Global Targeted Value lost 5.75% and EMSD lost 3.70%.

Compared to US small cap benchmarks, AVGS did better. The Russell 2000 (R2US) fell 5.98%, the S&P 600 (USML) fell 6.26% and US small cap value (USSC) fell 6.40%. AVGS was close to the world small cap index WSML, which lost 4.48%. Global Targeted Value has a larger weight in US small value, so it behaved more like the US indices.

Year to date, AVGS is the standout at 17.97%, well ahead of WSML (12.32%) and R2US (13.39%). Global Targeted Value is lagging at 9.80%. Mid caps (SPY4) are only up 8.87%, which shows how uneven the year has been for the smaller end of the US market.

f. Global Aggregate Bond Performance

11.5% of the portfolio is in iShares Core Global Aggregate Bond UCITS ETF (AGGU).

The chart below is the US government yield curve at 31st August (light blue) and 30th September (dark blue):

This was a poor month for bonds. AGGU, my global aggregate bond fund, lost 1.79% and is now down 1.64% for the year. ERNA, the ultrashort US dollar bond fund, gained 0.16% and is up 2.69% year to date. This is why I keep some money in short duration bonds. They barely move when rates jump.

The US yield curve shifted up by a large amount in just one month. The biggest moves were in the 2 to 5 year part of the curve, which rose by 0.54% to 0.60% as the market priced in more Fed hikes. The 10 year rose 0.54% to 5.29%. The 30 year rose 0.39% to 5.64%, after briefly topping 5.6% for the first time since 2002.

The shape of the curve did not change much. The gap between the 10 year and 2 year stayed at about 0.41%, so the curve is still upward sloping. What changed is the level. Short term bills now pay above 4%, and a 5 year Treasury pays over 5%. For a bond fund, the pain now is the price drop. The upside is that the money I put in from here earns a much higher yield going forward.

g. Currency Effect

The US dollar was roughly unchanged against the Singapore dollar in September. USD/SGD started the month around 1.276 and ended around 1.277, a change of less than 0.1%.

There was some movement within the month. The Singapore dollar strengthened to around 1.264 per US dollar in the second week, before the US dollar recovered after the Fed hike. By month end, the two had cancelled out.

Since most of my funds are in US dollars and my portfolio is measured in Singapore dollars, this means currency neither helped nor hurt my returns this month. The returns you see in the tables are close to what I actually experienced.

Role of Portfolio

I am building Daedalus to provide inflation-adjusted income that last: from today (age 45) for the rest of your life — potentially forever.

Daedalus is to provide for my essential and basic living expenses.

I am currently not drawing down on Daedalus.

I sized Daedalus versus the starting income that I can withdraw with the Safe Withdrawal Rate (SWR) framework. The SWR framework is the best way to create a perpetual inflation adjusted income stream that survives some of the most challenging 30-year, 50-year, 70-year income sequences.

You can read more about the spending I design Daedalus for and the SWR:

1. My notes regarding my essential spending.
2. My notes regarding my basic spending.
3. My elaboration of the Safe Withdrawal Rate: Article | YouTube Video

I will explain more about the income plan below.

Based on current portfolio value, the amount of monthly passive income that can be conservatively generated from the portfolio is

The goal of the portfolio is to generate steady, inflation-adjusted income to cover my essential living expenses. It’s built using a conservative initial withdrawal rate of 2.0–2.5%, which is designed to hold up even under extremely tough market conditions — including scenarios like the Great Depression, prolonged periods of high inflation (averaging 5.5–6% over 30 years), or major global conflicts. In other words, it’s stress-tested to withstand some of the worst financial environments in history.

Many did not realize inflation is not 3%, 3%, 3%, 3% every year but it will look like a sequence like such on top. Some of the toughest sequences that kills an income portfolio is not a 30% portfolio fall but persistently high inflation.

You will lose purchasing power, not just run out of money with a poorly design income portfolio.

If I want to preserve my purchasing power, then I need an income strategy to provide me an income that adjust for inflation in this way AND for the portfolio to last for a long time. This is why I rely on the Safe Withdrawal Rate (SWR) framework, which is a framework to size our portfolio capital to conservatively provide income even in high inflation sequences.

Here is a visual illustration of how the income stream will be based on the current portfolio value:

If I start withdrawing income based on a 2% SWR, or 2.5% SWR, my income progression will adjust based on last-year’s inflation rate. This allows me to preserve my purchasing power.

This hypothetical inflation sequence is challenging, and in year 15 the income is vastly higher than the start.

If your portfolio is lesser, or more, your starting income is different. You do not have to follow how conservative my initial withdrawal rate is. Even a 3% initial safe withdrawal rate is pretty conservative.

Amount of Cash Flow/Income Withdrawn/Extracted from Daedalus Income Portfolio

I wish to be fully transparent about the schedule of withdrawals from the portfolio because if the goal of the portfolio is eventually or currently provide income for spending, you would be interested to know how much is taken out from the portfolio.

There have not been any withdrawals or cash flow extraction for spending since the publication of the portfolio. I will update as and when it happens.

Capital Injected Into Daedalus

My goal for Daedalus is not to inject capital into the portfolio since its first report in May 2024. One of the reason is to show a portfolio that is buy-and-hold, instead of some weird “war chest market timing” strategy.

Usually the injection is if I have SRS commitments to reduce the tax expense.

Here are my historical Capital Injections to the portfolio:

Investment Strategy & Philosophy

After trying my best to learn how to invest for a while, the portfolio expresses my thoughts about investing at this point.

The portfolio is run in a

1. Strategic: allocation doesn’t change by short-term events.
2. Systematic: rules/decision-tree-based implemented either myself or an external manager.
3. Low-cost: investment implementation cost is kept reasonably low both on the fund level and also on the custodian level.
4. Passive: I spend relatively little effort mentally considering investments and also action-wise.

You can read more in this note article: Deconstructing Daedalus My Passive Income Investment Portfolio for My Essential & Basic Spending.

Portfolio Change Since Last Update (Usually Last Month)

There are no portfolio changes for the month.

Current Holdings – By Dollar Value and Percentages

The following table shows more details about the securities that I currently held.

The securities are grouped based on general strategy, whether they are:

1. Systematic Passive Fixed Income to reduce volatility.
2. Systematic Passive, which are equities that tries to capture the market risk in a systematic manner.
3. Systematic Active, which are equities that tries to capture various proven risk premiums such as value, momentum, quality, high profitability, and size in a systematic manner.
4. Hard Assets, securities that are more commodities related, that tends to do well in commodities related inflation situations.
5. Legacy Tracking Positions, securities that I still keep around, minimized to track their historical performance.

Portfolio Grouped by Account Money Source Location

Generally, you won’t have just one view about the securities in your portfolio.

In the following sections, I show my portfolio when viewed from different angles.

The first is the portfolio based on location.

1. Cash means held in accounts that we can make independent choices of which platform that we choose to invest in, when we decide to buy, when we decide to sell without any liquidity, tax, or locking considerations.
2. SRS Account is a Singapore-related retirement account. There are tax advantages on your ordinary working income if a person contributes to it. You can defer the income tax until after your retirement, where only 50% of your withdrawal then will be tax, at the prevailing tax bracket then.

This view does nothing much but some might be curious whether it makes up my money in CPF, here or there and so basically these are basically my cash monies and SRS.

Portfolio Grouped by Geographical Region Exposure of Securities

The second view groups the securities based on its geographical exposure.

Returns comes potentially from taking systematic risks and risks comes partly from the macro, interest and inflation exposure in different geographical regions.

The general regions:

1. Developed Markets – Strategies that systematically considers the large-cap and mid-cap equities in developed countries. You can view the countries, and sector composition at this MSCI World Index page.
2. Global – Strategies that systematically considers the large-cap, mid-cap, small-cap equities in both developed and emerging market countries. You can view the countries, and sector composition at this MSCI Emerging Markets IMI Index page.
3. US – Strategies that mainly tap small-cap US equities.

Portfolio Grouped by Fund, Cash or Individual Security

The third view groups the securities based on whether they are fund, cash or individual securities.

Almost 100% of the portfolio is implemented with funds. Funds can be:

1. Singapore Unit Trusts domiciled in Ireland.
2. London Stock Exchange listed exchange traded funds (ETFs) domiciled in Ireland.

Portfolio Grouped by Investment Strategy.

The last view groups the securities based on commonly known high level strategy names.

What Systematic Active Means: Funds that help me execute passively very specific, repeatable underlying securities selection on an ongoing basis. Here are some examples of the systematic active strategies in my portfolio:

1. Global Multifactor: From a basket of 1,600 developed market large and mid-cap stocks, rank the stocks by their value, by their 12-month momentum, by their degree of ROE and debt to asset, and then own the top 300. Do this every half-yearly or quarterly. You end up with a strategy that consistently owns 300 companies that are cheaper, quality and have greater momentum relative to a market cap weighted index.
2. Small Cap Value: From a basket of 3,000 developed market small cap stocks, rank the stocks based on price-to-book value (include intangibles in the book value). Also rank the stocks by operating earnings minus interest divide by book value. Eliminate the companies with low profitability. What we end up is two group of small cap stocks: The more profitable small caps but not too expensive, and the small caps stocks that are at least profitable but are very cheap. Own the top 30-35% of this cohort consistently. Have a manager that consistently helps me execute this.

In contrast, Systematic Passive are funds that help me track certain benchmark indexes. These indexes can be market-cap weighted, or equal-weighted, and reconstituted periodically so that they mirror the performance of benchmark indexes.

Hard Assets are the funds that provide exposure to energy-related securities.

Systematic Passive Fixed Income main helps damp the volatility of the portfolio. They are maintain based on the historical research that it is better to be less than 100% in equities if your portfolio is meant for income.

The fixed income/cash should not be viewed as a war chest to rebalanced to equity or take profit from equity. This is a strategic long term allocation whose main purpose is to optimized negative sequence of return risks.

The Main Custodians for the Securities in this Portfolio

The current custodians are:

1. Cash: Interactive Brokers LLC (not SG)
2. SRS: Philips FAME

If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.

Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory Firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.

You can view Kyith’s current portfolio here, which uses his Free Google Stock Portfolio Tracker.

His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

You can read more about Kyith here.

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