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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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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.
"The Fund sharply reduced duration to under one year as managers position for a structural shift to higher inflation. Globalization's disinflationary era is over, replaced by supply-chain fragmentation, labor scarcity, and capital-intensive industrial policy that will push equilibrium inflation from 1.5%-3.5% toward 3.5%-4.5%."
The Wasatch-Hoisington U.S. Treasury Fund returned 0.67% in Q2 2026, matching the Bloomberg US Aggregate Bond Index. The managers sharply reduced the Fund's duration to less than one year, reflecting their view that the U.S. is transitioning from the disinflationary era of globalization (1990-2020) to a structurally higher inflation regime. They argue that equilibrium inflation is migrating from roughly 1.5%-3.5% toward 3.5%-4.5%, with significant risk of episodes above 5%, driven by supply-chain fragmentation, labor scarcity, capital-intensive industrial policy, and the reversal of globalization's cost efficiencies. The shift from just-in-time to just-in-case production, strategic rivalry with China, and massive investment requirements for AI infrastructure, semiconductors, energy grids, and defense are all structurally inflationary. While new Fed Chairman Kevin Warsh's balance-sheet restraint may eventually suppress inflation, the near-term outlook is for higher term premiums, rising real rates, and greater interest-rate volatility. The managers expect long-term Treasury yields to trend upward absent a sustained recession or prolonged monetary restraint, creating a challenging environment for long-duration bonds.
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