| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
U.S. equity markets finished 2025 near record levels with the S&P 500 gaining 17.9% for the year, despite a six-week government shutdown. International equities significantly outperformed domestic markets by the widest margin in over thirty years, with MSCI EAFE up 31.2% and Emerging Markets up 33.6%, driven primarily by dollar weakness from trade policy uncertainty and budget deficit concerns. The municipal bond market saw record new issuance of $567 billion as higher construction costs drove state and local government borrowing. Fed leadership change is expected with Powell's term expiring May 2026, with his successor likely more sympathetic to Trump's lower rate preferences. However, a concerning K-shaped economic recovery has emerged where higher-income households and larger companies thrive while lower-income segments struggle with inflation and tariffs. Market strategists remain universally positive for 2026 equity returns, but the sustainability of current consumer spending patterns driven disproportionately by the top 10% of earners raises questions about broader economic health.
Despite strong market performance across asset classes, underlying economic divergence between higher and lower income segments creates sustainability concerns, while Fed leadership changes and continued infrastructure spending present both opportunities and risks for 2026.
Market strategists are almost universal in calling for equity returns to continue positive in 2026 due to solid economic growth and stronger corporate earnings. However, concerns exist about the K-shaped economy's sustainability. International equities expected to see fundamental performance as larger determinant of relative performance in 2026 as dollar depreciation slows.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 9 2026 | 2025 Q4 | - | Dollar, equities, Fed, infrastructure, international, Municipal, rates, Yields | - | Fed leadership change expected with Powell's term expiring May 2026, Trump advocating for lower rates. FOMC controls short-term rates but market participants control long-term rates. Municipal yield curve normalized from hockey stick to S-shape with investors receiving compensation for longer maturities. Dollar dropped significantly in first half of 2025 due to market uncertainty from trade policy changes, budget deficit concerns, and Fed independence questions. This contributed to international equity outperformance. Consensus expects continued dollar depreciation in 2026 but at slower pace. Municipal new issuance reached record $567 billion in 2025, surpassing 2024's $494 billion. Higher construction costs drove state and local government borrowing for additional infrastructure and energy needs, with growth expected to continue into 2026. |
| Oct 9 2025 | 2025 Q3 | - | cyclicals, energy, inflation, interest rates, valuation | MSFT US | The letter discusses portfolio positioning amid volatile energy markets and falling interest rates. It notes the potential for earnings recovery in cyclicals as inflation cools, while emphasizing disciplined valuation and risk control. Energy producers benefit from supply discipline and capital efficiency, supporting selective overweight positions. |
| Jun 30 2025 | 2025 Q2 | - | diversification, Market Volatility, monetary policy, tariffs, Valuations | - | The commentary reviews a volatile quarter shaped by tariffs, geopolitical risks, and shifting monetary expectations. Management notes narrowing market leadership and elevated valuations as key risks going forward. The outlook stresses vigilance, diversification, and selective risk-taking across asset classes. |
| Mar 31 2025 | 2025 Q1 | - | - | - | |
| Dec 31 2024 | 2024 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
DollarDollar depreciated -9% against trading partners in 2025, worst year since 2017. De-dollarization trend accelerating as world shifts away from US. Reduced net dollar exposure from 25% to 8% following geopolitical tensions and superpower positioning concerns. |
Depreciation De-dollarization Reserves Geopolitical |
Infrastructure SpendingPlaying on the continued theme of infrastructure spending, defense and energy sustainability, positions in Industrial and Energy sectors including Oshkosh, Coterra, OSI Systems, and Herc Holdings added positively to performance. |
Defense Energy Industrial Government Sustainability | |
RatesFederal Reserve resumed rate-cutting cycle with first cut since December 2024, signaling resumption of easing. Expected three cuts of 25bps between now and first quarter 2026 as Fed responds to signs of weakness in US labor market. |
Fed Monetary Policy Labor Market Easing Liquidity | |
| 2025 Q3 |
EnergyBHE operates regulated utilities serving 5.4 million customers and natural gas pipelines. The business faces significant investment needs driven by AI computing demand and wildfire risk mitigation, particularly in the Western U.S. |
Regulated Utilities Natural Gas Renewable Energy Grid Infrastructure |
RatesFed cut rates by 25bps on December 10 while describing growth as moderate and inflation as still somewhat elevated. Markets took message as cut now, likely pause soon. The opportunity set was less about calling one Fed meeting and more about trading the path via rates and FX. |
Fed Easing Policy Duration Curve | |
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable | |
| 2025 Q2 |
Markets |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 9, 2025 | Fund Letters | Andrew Davidson | MSFT US | Microsoft Corp. | Information Technology | Systems Software | Bull | NASDAQ | AI, Bonds, cloud, Concentration, Credit, growth, Software, valuation | Login |
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