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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Wasatch Hoisington US Treasury Fund 2025 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Wasatch Hoisington US Treasury Fund)

Primary Source Intelligence • Q2 2025 Letter Analysis

Wasatch Hoisington US Treasury Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Wasatch Hoisington US Treasury Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+2.34%

Annualized-3.08%

Positioning StanceCONSTRUCTIVE

GeographyUS, Global

Digest Analysis

Quick Take

"Hoisington maintains long-duration Treasury strategy despite recent underperformance, betting on deflationary forces from global capacity underutilization, AI's labor-displacing effects, restrictive Fed policy, and tariff-induced liquidity contraction."

Executive Summary

The Wasatch-Hoisington U.S. Treasury Fund returned 2.34% in Q3 2025, outperforming the Bloomberg US Aggregate Bond Index's 2.03% return due to declining long-term Treasury yields. However, the Fund declined 8.32% over the past 12 months versus a positive 2.88% for the Index due to rising yields during that period. The managers maintain their long-duration strategy with an effective duration of 20 years, expecting yields to trend lower due to powerful deflationary forces. These include declining capacity utilization globally since 2021-22, with idle plants across the U.S., EU, and China. AI represents a fundamentally different innovation that reduces rather than increases demand for labor, natural resources, and capital, creating disinflationary pressures. Federal Reserve policy remains restrictive with real world dollar liquidity at post-Covid lows. Tariffs and retaliation further reduce liquidity through profit squeezes and reduced international capital flows. Real Gross Output has decelerated to just 1% growth, confirming weaker economic conditions than GDP suggests.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

85%

CautiousHigh

High Conviction (85%)

Very high conviction evidenced by maintaining extreme duration positioning (20 years vs 6 year benchmark) despite recent underperformance. The manager provides detailed theoretical framework and multiple supporting data points for their deflationary thesis, showing strong belief in their positioning.

Growth Outlook

20%

BearishBullish

Bearish (20%)

The manager expresses a pessimistic view of the economic environment, citing declining capacity utilization globally, weakening economic conditions masked by GDP, and multiple deflationary headwinds. They describe the economy as facing persistent challenges through 2025 and beyond.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

Despite the bearish economic outlook, the manager maintains an aggressive duration bet with 20-year effective duration versus 6 years for the benchmark. This represents a concentrated, high-conviction positioning that could generate significant outperformance if their thesis proves correct.

Capital Deployment

10%

De-riskingDeploying

De-risking (10%)

The manager maintains their existing long-duration positioning without indicating significant changes in deployment. They remain committed to their strategy but don't describe active scaling or new deployment, suggesting steady-state positioning.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

The manager expects continued economic weakness and deflationary pressures through 2025 and beyond, but frames this as supportive for their Treasury positioning. Their guidance is cautious on the economy but constructive for their strategy.

Language Signal

35%

BearishBullish

Bearish (35%)

Language emphasizes risks, headwinds, declining conditions, and deflationary pressures. Terms like 'idle plants,' 'liquidity-draining,' 'profit compression,' and 'financial stress' dominate the discussion, though the manager frames these as opportunities for their strategy.

Perceived Risk

75%

Low RiskElevated

Elevated Risk (75%)

High perceived systemic risk from multiple sources: declining global capacity utilization, restrictive monetary policy, tariff-induced liquidity contraction, rising bankruptcies, and AI-driven economic disruption. The manager identifies numerous interconnected macro risks.

Opportunity Density

30%

ScarceAbundant

Scarce (30%)

Limited opportunity set focused specifically on long-duration Treasuries. The manager sees opportunity in their narrow specialty but describes a challenging broader environment with widespread economic headwinds and limited attractive alternatives.

Time Horizon

80%

Short-TermLong-Term

Decade+ (80%)

Long-term patient capital approach evidenced by maintaining 20-year duration positioning despite recent underperformance. The manager discusses structural economic changes and expects their thesis to play out over extended periods, showing multi-year investment horizon.